1934 Act Registration No. 1-14700
SECURITIES AND EXCHANGE COMMISSION
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2005
Taiwan Semiconductor Manufacturing Company Ltd.
No. 8, Li-Hsin Rd. 6,
Hsinchu Science Park,
Taiwan
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F þ | Form 40-F o |
(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes o | No þ |
(If Yes is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82: .)
Taiwan Semiconductor Manufacturing
Company, Ltd.
Financial Statements for the
Three Months Ended March 31, 2005 and 2004 and
Independent Accountants Review Report
INDEPENDENT ACCOUNTANTS REVIEW REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company, Ltd.
We have reviewed the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company, Ltd. as of March 31, 2005 and 2004, and the related statements of income and cash flows for the three months then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to issue a report on these financial statements based on our reviews.
We conducted our reviews in accordance with Statement on Auditing Standards No. 36 Review of Financial Statements issued by the Auditing Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China.
April 13, 2005
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such financial statements are those generally accepted and applied in the Republic of China.
For the convenience of readers, the accountants report and the accompanying financial statements
have been translated into English from the original Chinese version prepared and used in the
Republic of China. If there is any conflict between the English version and the original Chinese
version or any difference in the interpretation of the two versions, the Chinese-language
accountants report and financial statements shall prevail.
- 1 -
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
BALANCE SHEETS
MARCH 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars, Except Par Value)
(Reviewed, Not Audited)
2005 | 2004 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
ASSETS |
||||||||||||||||
CURRENT ASSETS |
||||||||||||||||
Cash and cash equivalents (Notes 2, 3 and 4) |
$ | 60,218,990 | 12 | $ | 106,507,988 | 25 | ||||||||||
Short-term investments, net (Notes 2 and 4) |
51,638,170 | 11 | 19,829,168 | 5 | ||||||||||||
Receivables from related parties (Note 18) |
14,079,482 | 3 | 16,201,278 | 4 | ||||||||||||
Notes and accounts receivable |
13,069,620 | 3 | 14,707,017 | 3 | ||||||||||||
Allowance for doubtful receivables (Note 2) |
(978,577 | ) | | (1,014,509 | ) | | ||||||||||
Allowance for sales returns and others (Note 2) |
(3,741,534 | ) | (1 | ) | (2,893,814 | ) | (1 | ) | ||||||||
Other receivables from related parties (Note 18) |
2,645,421 | | 249,368 | | ||||||||||||
Other financial assets (Notes 2 and 21) |
1,007,196 | | 1,447,852 | | ||||||||||||
Inventories, net (Notes 2 and 5) |
13,428,985 | 3 | 11,014,523 | 3 | ||||||||||||
Deferred income taxes assets (Notes 2 and 12) |
7,296,000 | 2 | 8,212,000 | 2 | ||||||||||||
Prepaid expenses and other current assets |
1,080,644 | | 1,456,034 | 1 | ||||||||||||
Total current assets |
159,744,397 | 33 | 175,716,905 | 42 | ||||||||||||
LONG-TERM INVESTMENTS (Notes 2, 6, 18 and 20) |
||||||||||||||||
Equity method |
49,157,468 | 10 | 37,275,028 | 9 | ||||||||||||
Cost method |
779,340 | | 703,434 | | ||||||||||||
Long-term bonds |
16,503,809 | 3 | | | ||||||||||||
Other investments |
10,436,600 | 3 | | | ||||||||||||
Total long-term investments |
76,877,217 | 16 | 37,978,462 | 9 | ||||||||||||
PROPERTY, PLANT, AND EQUIPMENT (Notes 2, 7 and 18) |
||||||||||||||||
Cost |
||||||||||||||||
Buildings |
87,452,818 | 18 | 71,772,658 | 17 | ||||||||||||
Machinery and equipment |
424,088,493 | 88 | 341,494,302 | 81 | ||||||||||||
Office equipment |
7,360,112 | 2 | 6,340,506 | 1 | ||||||||||||
518,901,423 | 108 | 419,607,466 | 99 | |||||||||||||
Accumulated depreciation |
(315,454,528 | ) | (65 | ) | (261,678,445 | ) | (62 | ) | ||||||||
Advance payments and construction in progress |
26,406,814 | 5 | 38,003,417 | 9 | ||||||||||||
Net property, plant, and equipment |
229,853,709 | 48 | 195,932,438 | 46 | ||||||||||||
GOODWILL (Note 2) |
1,829,049 | | 2,177,439 | 1 | ||||||||||||
OTHER ASSETS |
||||||||||||||||
Deferred charges, net (Notes 2, 8 and 20) |
8,438,529 | 2 | 7,502,506 | 2 | ||||||||||||
Deferred income taxes assets (Notes 2 and 12) |
3,751,059 | 1 | 1,534,457 | | ||||||||||||
Refundable deposits |
85,542 | | 26,229 | | ||||||||||||
Assets leased to others, net (Note 2) |
77,180 | | 83,622 | | ||||||||||||
Idle assets (Note 2) |
17,130 | | 85,463 | | ||||||||||||
Total other assets |
12,369,440 | 3 | 9,232,277 | 2 | ||||||||||||
TOTAL |
$ | 480,673,812 | 100 | $ | 421,037,521 | 100 | ||||||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||||||
CURRENT LIABILITIES |
||||||||||||||||
Accounts payable |
$ | 5,344,256 | 1 | $ | 7,697,360 | 2 | ||||||||||
Payables to related parties (Note 18) |
2,863,489 | 1 | 4,926,011 | 1 | ||||||||||||
Payable to contractors and equipment suppliers |
10,920,422 | 2 | 12,647,943 | 3 | ||||||||||||
Accrued expenses and other current liabilities (Notes 2, 10, 20 and 21) |
8,262,691 | 2 | 7,810,028 | 2 | ||||||||||||
Current portion of bonds payable (Note 9) |
10,500,000 | 2 | 5,000,000 | 1 | ||||||||||||
Total current liabilities |
37,890,858 | 8 | 38,081,342 | 9 | ||||||||||||
LONG-TERM LIABILITIES |
||||||||||||||||
Bonds payable (Note 9) |
19,500,000 | 4 | 30,000,000 | 7 | ||||||||||||
Other long-term payables (Notes 10 and 20) |
1,911,506 | 1 | 2,999,977 | 1 | ||||||||||||
Other payables to related parties (Notes 18 and 20) |
1,722,326 | | | | ||||||||||||
Total long-term liabilities |
23,133,832 | 5 | 32,999,977 | 8 | ||||||||||||
OTHER LIABILITIES |
||||||||||||||||
Accrued pension cost (Notes 2 and 11) |
3,240,343 | 1 | 2,714,032 | 1 | ||||||||||||
Deferred gain on intercompany sale (Notes 2 and 18) |
684,423 | | | | ||||||||||||
Guarantee deposits (Note 20) |
370,876 | | 656,128 | | ||||||||||||
Total other liabilities |
4,295,642 | 1 | 3,370,160 | 1 | ||||||||||||
Total liabilities |
65,320,332 | 14 | 74,451,479 | 18 | ||||||||||||
SHAREHOLDERS EQUITY (Notes 2, 14, 15 and 16) |
||||||||||||||||
Capital stock $10 par value
Authorized: 24,600,000 thousand shares |
||||||||||||||||
Issued: 23,252,863 thousand shares in 2005, 20,266,619 thousand shares
in 2004 |
232,528,635 | 48 | 202,666,189 | 48 | ||||||||||||
Capital surplus |
56,574,377 | 12 | 56,860,879 | 13 | ||||||||||||
Retained earnings |
||||||||||||||||
Appropriated as legal reserve |
25,528,007 | 5 | 20,802,137 | 5 | ||||||||||||
Appropriated as special reserve |
| | 68,945 | | ||||||||||||
Unappropriated earnings |
105,020,406 | 22 | 69,018,210 | 16 | ||||||||||||
Cumulative translation adjustments |
(2,725,918 | ) | (1 | ) | (728,208 | ) | | |||||||||
Treasury stock (at cost) - 45,037 thousand shares in 2005 and 48,518
thousand shares in 2004 |
(1,572,027 | ) | | (2,102,110 | ) | | ||||||||||
Total shareholders equity |
415,353,480 | 86 | 346,586,042 | 82 | ||||||||||||
TOTAL |
$ | 480,673,812 | 100 | $ | 421,037,521 | 100 | ||||||||||
The accompanying notes are an integral part of the financial statements.
- 2 -
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)
2005 | 2004 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
GROSS SALES (Notes 2 and 18) |
$ | 56,413,097 | $ | 58,785,691 | ||||||||||||
SALES RETURNS AND ALLOWANCES (Note 2) |
(759,880 | ) | (1,272,486 | ) | ||||||||||||
NET SALES |
55,653,217 | 100 | 57,513,205 | 100 | ||||||||||||
COST OF SALES (Notes 13 and 18) |
34,004,376 | 61 | 34,783,992 | 60 | ||||||||||||
GROSS PROFIT |
21,648,841 | 39 | 22,729,213 | 40 | ||||||||||||
OPERATING EXPENSES (Notes 13 and 18) |
||||||||||||||||
Research and development |
3,348,555 | 6 | 2,860,983 | 5 | ||||||||||||
General and administrative |
1,944,834 | 3 | 2,031,122 | 4 | ||||||||||||
Marketing |
278,876 | 1 | 296,459 | | ||||||||||||
Total operating expenses |
5,572,265 | 10 | 5,188,564 | 9 | ||||||||||||
INCOME FROM OPERATIONS |
16,076,576 | 29 | 17,540,649 | 31 | ||||||||||||
NON-OPERATING INCOME AND GAINS |
||||||||||||||||
Interest (Notes 2 and 21) |
780,062 | 1 | 256,296 | 1 | ||||||||||||
Settlement income (Note 20) |
569,276 | 1 | | | ||||||||||||
Technical service income (Notes 18 and 20) |
77,111 | | 56,983 | | ||||||||||||
Gain on disposal of property, plant, and equipment
(Note 2) |
60,707 | | 59,087 | | ||||||||||||
Investment income recognized by equity method, net
(Notes 2 and 6) |
| | 802,676 | 1 | ||||||||||||
Gain on sales of investments, net (Note 2) |
| | 94,477 | | ||||||||||||
Other (Note 18) |
68,272 | | 92,135 | | ||||||||||||
Total non-operating income and gains |
1,555,428 | 2 | 1,361,654 | 2 | ||||||||||||
NON-OPERATING EXPENSES AND LOSSES |
||||||||||||||||
Interest (Notes 7 and 21) |
583,273 | 1 | 330,172 | 1 | ||||||||||||
Unrealized valuation loss of short-term investments
(Notes 2 and 4) |
257,718 | 1 | | | ||||||||||||
Foreign exchange loss, net (Notes 2 and 21) |
200,614 | | 122,117 | | ||||||||||||
Investment loss recognized by equity method, net
(Notes 2 and 6) |
198,178 | | | | ||||||||||||
Loss on sales of investments, net (Note 2) |
64,473 | | | |
(Continued)
- 3 -
2005 | 2004 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
Loss on disposal of property, plant and equipment
(Note 2) |
$ | 37,922 | | $ | 6,749 | | ||||||||||
Other |
24,485 | | 7,832 | | ||||||||||||
Total non-operating expenses and losses |
1,366,663 | 2 | 466,870 | 1 | ||||||||||||
INCOME BEFORE INCOME TAX |
16,265,341 | 29 | 18,435,433 | 32 | ||||||||||||
INCOME TAX BENEFIT (Notes 2 and 12) |
553,056 | 1 | 353,769 | 1 | ||||||||||||
NET INCOME |
$ | 16,818,397 | 30 | $ | 18,789,202 | 33 | ||||||||||
2005 | 2004 | |||||||||||||||
Before | After | Before | After | |||||||||||||
Income | Income | Income | Income | |||||||||||||
Tax | Tax | Tax | Tax | |||||||||||||
EARNINGS PER SHARE (Note 17) |
||||||||||||||||
Basic earnings per share |
$ | 0.70 | $ | 0.72 | $ | 0.79 | $ | 0.81 | ||||||||
Diluted earnings per share |
$ | 0.70 | $ | 0.72 | $ | 0.79 | $ | 0.80 | ||||||||
The pro forma net income and earnings per share (after income tax) are shown as follows, based on the assumption that the stock of parent company held by its subsidiaries is treated as an investment instead of the treasury stock (Notes 2 and 16):
2005 | 2004 | |||||||
NET INCOME |
$ | 16,821,282 | $ | 18,790,578 | ||||
EARNINGS PER SHARE (NT$) |
||||||||
Basic earnings per share |
$ | 0.72 | $ | 0.80 | ||||
Diluted earnings per share |
$ | 0.72 | $ | 0.80 | ||||
The accompanying notes are an integral part of the financial statements. | (Concluded) |
- 4 -
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
2005 | 2004 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net income |
$ | 16,818,397 | $ | 18,789,202 | ||||
Adjustments to reconcile net income to net cash provided by operating
activities: |
||||||||
Depreciation and amortization |
16,668,655 | 15,088,680 | ||||||
Deferred income taxes |
(553,056 | ) | (353,861 | ) | ||||
Investment loss (income) recognized by equity method, net |
198,178 | (802,676 | ) | |||||
Amortization of premium/discount of long-term bond investments |
28,956 | | ||||||
Gain on disposal of property, plant and equipment, net |
(22,785 | ) | (52,338 | ) | ||||
Accrued pension cost |
139,147 | 113,781 | ||||||
Changes in operating assets and liabilities: |
||||||||
Decrease (increase) in: |
||||||||
Receivables from related parties |
2,106,601 | (1,333,616 | ) | |||||
Notes and accounts receivable |
2,257,261 | (789,210 | ) | |||||
Allowance for doubtful receivables |
(1,884 | ) | (1,513 | ) | ||||
Allowance for sales returns and others |
413,620 | 767,789 | ||||||
Other receivables from related parties |
(931,365 | ) | (116,405 | ) | ||||
Other financial assets |
1,337,974 | (758,412 | ) | |||||
Inventories, net |
742,960 | (107,365 | ) | |||||
Prepaid expenses and other current assets |
(173,855 | ) | 528,234 | |||||
Increase (decrease) in: |
||||||||
Accounts payable |
(1,144,361 | ) | 1,613,484 | |||||
Payables to related parties |
(901,983 | ) | 425,871 | |||||
Accrued expenses and other current liabilities |
(1,026,377 | ) | (310,038 | ) | ||||
Net cash provided by operating activities |
35,956,083 | 32,701,607 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Decrease (increase) in short-term investments |
1,340,925 | (7,270,149 | ) | |||||
Acquisitions of: |
||||||||
Long-term investments |
(4,276,570 | ) | (167,902 | ) | ||||
Property, plant and equipment |
(38,161,372 | ) | (16,351,217 | ) | ||||
Proceeds from disposal of property, plant and equipment |
120,613 | 67,672 | ||||||
Increase in deferred charges |
(285,727 | ) | (326,944 | ) | ||||
Decrease (increase) in refundable deposits |
(129 | ) | 151,150 | |||||
Net cash used in investing activities |
(41,262,260 | ) | (23,897,390 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Decrease in guarantee deposits |
(41,517 | ) | (107,361 | ) | ||||
Proceeds from exercise of stock options |
34,866 | | ||||||
Repurchase of treasury stock |
| (476,870 | ) | |||||
Net cash used in financing activities |
(6,651 | ) | (584,231 | ) | ||||
(Continued)
- 5 -
2005 | 2004 | |||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
$ | (5,312,828 | ) | $ | 8,219,986 | |||
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD |
65,531,818 | 98,288,002 | ||||||
CASH AND CASH EQUIVALENTS, END OF THE PERIOD |
$ | 60,218,990 | $ | 106,507,988 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
||||||||
Interest paid (excluding the amounts capitalized of NT$51,978 thousand
for the three months ended March 31, 2004) |
$ | 700,160 | $ | 372,684 | ||||
Income tax paid |
$ | 22,522 | $ | 92 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES |
||||||||
Current portion of bonds payable |
$ | 10,500,000 | $ | 5,000,000 | ||||
Current portion of other payables to related parties (under payables to
related parties) |
$ | 949,841 | $ | | ||||
Current portion of other long-term payables (under accrued expenses and
other current liabilities) |
$ | 1,487,738 | $ | 1,826,065 | ||||
The accompanying notes are an integral part of the financial statements. | (Concluded) |
- 6 -
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2005 AND 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
(Reviewed, Not Audited)
1. | GENERAL | |||
Taiwan Semiconductor Manufacturing Company, Ltd. (the Company or TSMC), a Republic of China (R.O.C.) corporation, was incorporated as a venture among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs). | ||||
The Company is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other semiconductor devices and the manufacturing of masks. | ||||
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
The financial statements are presented in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the R.O.C. | ||||
For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail. | ||||
Significant accounting policies are summarized as follows: | ||||
Use of Estimates | ||||
The preparation of financial statements in conformity with the aforementioned guidelines and principles requires management to make reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from managements estimates. | ||||
Classification of Current and Non-current Assets and Liabilities | ||||
Current assets are those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations due on demand within one year from the balance sheet date. Assets and liabilities that are not classified as current are non-current assets and liabilities, respectively. | ||||
Cash Equivalents | ||||
Government bonds under repurchase agreements and notes acquired with maturities less than three months from the date of purchase are classified as cash equivalents. |
- 7 -
Short-term Investments | ||||
Short-term investments primarily consist of corporate bonds, asset-backed securities, agency bonds, bond funds, government bonds and others. | ||||
Short-term investments are recorded at historical cost and are carried at the lower of cost or market value as of the balance sheet date. An allowance for decline in value is provided and is charged to current earnings when the aggregate carrying amount of the investments exceeds the aggregate market value. A reversal of the allowance is recorded for a subsequent recovery of the market value. | ||||
The costs of funds and listed stocks sold are accounted for using the weighted-average method; whereas the other securities are accounted for using the specific identification method. | ||||
The market value of funds is determined using the net asset value of the funds at the end of the period, and the market value of listed stocks is determined using the average-closing price of the listed stocks for the last month of the period. The market value of other short-term investments are determined using the average of bid and ask prices as of the balance sheet date. | ||||
Cash dividends are recorded as investment income in the current period. | ||||
Allowance for Doubtful Receivables | ||||
An allowance for doubtful receivables is provided based on a review of the collectibility of accounts receivables. The Company determines the amount of allowance for doubtful receivables by examining the historical collection experience and current trends in the credit quality of its customers as well as its internal credit policies. | ||||
Revenue Recognition and Allowance for Sales Returns and Others | ||||
The Company recognizes revenue when evidence of an arrangement exists, the shipment is made, price is fixed or determinable, and the collectibility is reasonably assured. Revenues from the design and manufacturing of photo masks, which are used as manufacturing tools in the fabrication process, are recognized when the photo masks are qualified by our customers. We record a provision for estimated future returns and other allowances in the same period the related revenue is recorded. Provision for estimated sales returns and other allowances are generally made at a specific percentage based on historical experience, our managements judgment, and any known factors that would significantly affect the allowance. | ||||
Sales are determined using the fair value taking into account related sales discounts agreed to by the Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the end of the month in which the sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, the fair value of receivables is equivalent to the nominal amount of cash received. | ||||
Inventories | ||||
Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost and adjusted to the approximate weighted-average cost at the end of the period. Market value represents replacement cost for raw materials, supplies and spare parts and net realizable value for finished goods and work in process. The Company assesses the impact of changing technology on its inventory on hand and writes off inventories that are considered obsolete. Ending inventories are evaluated for estimated excess quantities and obsolescence based on a demand forecast within a specific time horizon, which is generally 180 days or less. Estimated losses on scrap and slow-moving items are recognized in the allowance for losses. |
- 8 -
Long-term Investments | ||||
Investments in companies wherein the Company exercises significant influence on the operating and financial policy decisions are accounted for using the equity method of accounting. The Companys proportionate share in the net income or net loss of investee companies is recognized in the investment income/loss recognized by equity method, net account. When equity investments are made, the difference, if any, between the cost of investment and the Companys proportionate share of the investees net equity is amortized using the straight-line method over five years and is also recorded in the investment income/loss recognized by equity method, net account. When an indication of significant impairment is identified, the impairment loss is charged to current income. | ||||
When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carrying amount of the investment in the investee differs from the amount of the Companys proportionate share in the investees net equity. The Company records such difference as an adjustment to long-term investments with the corresponding amount charged or credited to capital surplus. | ||||
Investments in companies wherein the Company does not exercise significant influence are recorded at historical cost. Cash dividends are recognized as investment income in the year received but are accounted for as reductions in the carrying amount of the long-term investments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income or the carrying amount of the investment. The carrying amounts of investments whose fair market values are not readily ascertainable are reduced to reflect an other-than-temporary decline in their values, with the related impairment loss charged to income. | ||||
Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value. An allowance is recognized when the net asset value of the funds is lower than their cost, with the corresponding amount recorded as a reduction to shareholders equity. A reversal of the allowance will result from a subsequent recovery of the net asset value. | ||||
The costs of stocks and mutual funds sold are determined using the weighted-average method. | ||||
Investments in long-term bonds are stated at amortized cost. The discount or premium is amortized over the duration period using the interest method, and recorded as an adjustment to interest income. | ||||
If an investee company recognizes an unrealized loss on its long-term investment using the lower-of-cost-or-market method, the Company also recognizes a corresponding unrealized loss in proportion to its ownership percentage in the investee company and records the amount as a component of its shareholders equity. | ||||
Gains or losses on sales from the Company to investee companies accounted for using the equity method are deferred in proportion to the Companys ownership percentage in the investee companies until realized through transactions with third parties. The entire amount of the gains or losses on sales to majority-owned subsidiaries is deferred until such gains or losses are realized through the subsequent sales of the related products to third parties. | ||||
Gains or losses on sales from investee companies to the Company are deferred in proportion to the Companys ownership percentages in the investee companies until realized through transactions with third parties. | ||||
Gains and losses on sales by investee companies accounted for using the equity method are deferred in proportion to the Companys ownership percentages in the investee companies until realized through transactions with third parties. | ||||
If an investees functional currency is a foreign currency, translation adjustments will result from the process of translating the investees financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported as a separate component of shareholders equity. |
- 9 -
Property, Plant and Equipment, Assets Leased to Others and Idle Assets | ||||
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When an indication of significant impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in the future period, the subsequent reversal of the impairment loss would be recognized as a gain. However, the increased carrying amount of an asset due to a reversal of an impairment loss should not exceed the carrying amount that would have been determined (net of depreciation), had no impairment loss been recognized for the asset in prior years. Idle assets are stated at the lower of net realizable value or book value. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and repairs are expensed in the period incurred. Interest expense incurred during the purchase and construction period is also capitalized. | ||||
Depreciation is computed using the straight-line method over the following estimated service lives: buildings 10 to 20 years; machinery and equipment 5 years; and office equipment 3 to 5 years. | ||||
Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the corresponding accounts, with any gain or loss credited or charged to non-operating income or expenses in the period of sale or disposal. | ||||
Goodwill | ||||
Goodwill represents the excess of the consideration paid for acquisition over the fair market value of identifiable net assets acquired and acquisition costs. Goodwill is amortized using the straight-line method over the estimated life of 10 years. If an event occurs or circumstances change that more likely than not reduce the fair value of goodwill below its carrying value, the impairement loss is charged to current income. Subsequent recovery in the fair value of the goodwill may not reverse the impairement loss previously recorded. | ||||
Deferred Charges | ||||
Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized as follows: technology license fees the shorter of the estimated life of the technology or the term of the technology transfer contract; software and system design costs and other charges 3 years. When an indication of significant impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in the future period, the subsequent reversal of the impairment loss would be recognized as a gain. However, the increased carrying amount of an asset due to a reversal of an impairment loss should not exceed the carrying amount that would have been determined (net of amortization), had no impairment loss been recognized for the asset in prior years. | ||||
Pension Costs | ||||
The Company records net periodic pension costs on the basis of actuarial calculations. Unrecognized net transition obligation and unrecognized net gains or losses are amortized over 25 years. | ||||
Income Tax | ||||
The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled. |
- 10 -
Any tax credits arising from the purchases of machinery, equipment and technology, research and development expenditures, personnel training, and investments in important technology-based enterprises are recognized using the flow-through method. | ||||
Adjustments of prior years tax liabilities are added to or deducted from the current years tax provision. | ||||
Income taxes on unappropriated earnings of 10% are expensed in the year of shareholder approval which is the year subsequent to the year the earnings are generated. | ||||
Stock-based Compensation | ||||
Employee stock option plans that are amended or have options granted on or after January 1, 2004 must be accounted for by the interpretations issued by the Accounting Research and Development Foundation. The Company adopted the intrinsic value method and any compensation cost determined using this method is charged to expense over the employee vesting period. | ||||
Treasury Stock | ||||
When the Company repurchases its outstanding common stock, the cost of the reacquired stock is recorded as treasury stock as a reduction to shareholders equity. When the Company retires treasury stock, the treasury stock account is reduced and the common stock as well as the capital surplus additional paid-in capital are reversed in proportionate to the equity percentage of the retirement. When the book value of the treasury stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to capital surplus - treasury stock and to retained earnings for any remaining amount. The Companys stock held by its subsidiaries is also treated as treasury stock and reclassified from long-term investments to treasury stock. The cash dividends received by the subsidiaries from the Company are recorded under capital surplus treasury stock. | ||||
Foreign-currency Transactions | ||||
Foreign currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in current income. At the end of each period, assets and liabilities denominated in foreign currencies are revalued at the prevailing exchange rates with the resulting gains or losses recognized in current income. | ||||
Derivative Financial Instruments | ||||
The Company enters into foreign currency forward contracts to manage currency exposures on cash flow and on foreign-currency-denominated assets and liabilities. The contracts are recorded in New Taiwan dollars at the current rate of exchange of the contract date. The differences in the New Taiwan dollar amounts translated using the current rates and the amounts translated using the contracted forward rates on the contract date are amortized over the terms of the forward contracts using the straight-line method. At the end of each period, the receivables or payables arising from forward contracts are restated using the prevailing current rates at the balance sheet date with the resulting differences credited or charged to income. In addition, the receivables and payables related to the forward contracts of the same counter party are netted with the resulting amount presented as either an asset or a liability. Any resulting gain or loss upon settlement is credited or charged to income in the period of settlement. |
- 11 -
The Company enters into cross-currency swap contracts to manage currency exposures on foreign currency denominated assets and liabilities. The principal amount is recorded using the current rates at the contract date. The differences in the New Taiwan dollar amounts translated using the current rates and the amounts translated using the contracted rates on the contract date are amortized over the terms of the contracts using the straight-line method. At the end of each period, the receivables or payables arising from cross-currency swap contracts are restated using the prevailing current rate with the resulting differences credited or charged to income. In addition, the receivables and payables related to the contracts of the same counter party are netted with the resulting amount presented as either an asset or a liability. The difference in interest computed pursuant to the contracts on each settlement date or the balance sheet date is recorded as an adjustment to the interest income or expense associated with the hedged items. Any resulting gain or loss upon settlement is credited or charged to income in the period of settlement. | ||||
The Company enters into interest rate swap contracts to manage exposures to changes in interest rates on existing assets or liabilities. These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment to interest income or expense associated with the hedged items. | ||||
Reclassifications | ||||
Certain accounts in the financial statements as of and for the three months ended March 31, 2004 have been reclassified to conform to the financial statements as of and for the three months ended March 31, 2005. | ||||
3. | CASH AND CASH EQUIVALENTS |
March 31 | ||||||||
2005 | 2004 | |||||||
Cash and bank deposits |
$ | 33,198,480 | $ | 96,498,092 | ||||
Government bonds acquired under repurchase agreements |
26,670,303 | 10,009,896 | ||||||
Corporate issued notes |
350,207 | | ||||||
$ | 60,218,990 | $ | 106,507,988 | |||||
4. | SHORT-TERM INVESTMENTS |
March 31 | ||||||||
2005 | 2004 | |||||||
Government bonds |
$ | 14,292,300 | $ | | ||||
Corporate issued asset-backed securities |
12,192,028 | | ||||||
Agency bonds |
10,564,068 | | ||||||
Bond funds |
10,534,374 | 6,700,000 | ||||||
Government bonds |
3,451,873 | 9,762,665 | ||||||
Money market funds |
677,811 | | ||||||
Corporate issued notes |
157,612 | | ||||||
Commercial papers |
94,506 | | ||||||
Listed stocks |
6,528 | 11,358 | ||||||
Government bonds acquired under repurchase agreements |
| 3,355,145 | ||||||
51,971,100 | 19,829,168 | |||||||
Allowance for valuation losses |
(332,930 | ) | | |||||
$ | 51,638,170 | $ | 19,829,168 | |||||
Market value |
$ | 51,638,170 | $ | 19,905,368 | ||||
- 12 -
The Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage investment portfolios for the Company. In accordance with the investment guidelines and terms in these agreements, the securities invested by the fund managers cannot be below a pre-defined credit rating. As of March 31, 2005, the Company had investment portfolios with these fund managers that aggregated to an original amount of US$1,200,000 thousand. The investment portfolios included securities such as corporate bonds, asset-backed securities, agency bonds, government bonds and others. Securities acquired with maturities less than three months from the date of purchase were reclassified as cash equivalents. | ||||
5. | INVENTORIES, NET |
March 31 | ||||||||
2005 | 2004 | |||||||
Finished goods |
$ | 2,844,581 | $ | 1,842,560 | ||||
Work in process |
10,359,806 | 9,313,327 | ||||||
Raw materials |
896,897 | 632,825 | ||||||
Supplies and spare parts |
684,714 | 782,487 | ||||||
14,785,998 | 12,571,199 | |||||||
Allowance for losses |
(1,357,013 | ) | (1,556,676 | ) | ||||
$ | 13,428,985 | $ | 11,014,523 | |||||
6. | LONG-TERM INVESTMENTS |
March 31 | ||||||||||||||||
2005 | 2004 | |||||||||||||||
% of | % of | |||||||||||||||
Carrying | Owner- | Carrying | Owner- | |||||||||||||
Amount | ship | Amount | ship | |||||||||||||
Equity method
|
||||||||||||||||
TSMC International Investment Ltd. (TSMC
International)
|
$ | 23,184,094 | 100 | $ | 22,383,406 | 100 | ||||||||||
TSMC (Shanghai) Company Limited
(TSMC-Shanghai) |
10,732,322 | 100 | 1,819,487 | 100 | ||||||||||||
Vanguard International Semiconductor Corporation
(VIS) |
5,698,410 | 28 | 4,375,675 | 28 | ||||||||||||
TSMC Partners, Ltd. (TSMC Partners) |
3,871,369 | 100 | 4,011,311 | 100 | ||||||||||||
Systems on Silicon Manufacturing Company Pte
Ltd. (SSMC) |
3,364,490 | 32 | 2,824,776 | 32 | ||||||||||||
Emerging Alliance Fund, L.P. (Emerging Alliance) |
747,632 | 99 | 824,793 | 99 | ||||||||||||
TSMC North America (TSMC-North America) |
556,517 | 100 | 412,786 | 100 | ||||||||||||
Global Unichip Corporation (GUC) |
396,716 | 47 | 359,454 | 47 | ||||||||||||
VentureTech Alliance Fund II, L.P. (VTAF II) |
321,035 | 98 | | | ||||||||||||
TSMC Japan K. K. (TSMC-Japan) |
97,787 | 100 | 104,186 | 100 | ||||||||||||
VisEra Technologies Company, Ltd. (VisEra) |
62,638 | 25 | 50,499 | 25 | ||||||||||||
Chi Cherng Investment Co., Ltd. (Chi Cherng) |
50,629 | 36 | 43,138 | 36 | ||||||||||||
Hsin Ruey Investment Co., Ltd. (Hsin Ruey) |
49,879 | 36 | 42,083 | 36 | ||||||||||||
Taiwan Semiconductor Manufacturing Company
Europe B.V. (TSMC-Europe) |
23,950 | 100 | 23,434 | 100 | ||||||||||||
49,157,468 | 37,275,028 | |||||||||||||||
(Continued)
- 13 -
March 31 | ||||||||||||||||
2005 | 2004 | |||||||||||||||
% of | ||||||||||||||||
Carrying | Owner- | Carrying | Owner- | |||||||||||||
Amount | ship | Amount | ship | |||||||||||||
Cost method
|
||||||||||||||||
Non-publicly traded stocks |
$ | 482,500 | | $ | 432,500 | | ||||||||||
Funds |
296,840 | | 270,934 | | ||||||||||||
779,340 | 703,434 | |||||||||||||||
Long-term bonds
|
||||||||||||||||
Government bonds |
11,819,517 | | ||||||||||||||
Corporate bonds
|
||||||||||||||||
China Steel Corporation |
2,957,875 | | ||||||||||||||
Taiwan Power Company |
911,967 | | ||||||||||||||
Nan Ya Plastics Corporation |
406,072 | | ||||||||||||||
Formosa Plastics Corporation |
272,336 | | ||||||||||||||
Formosa Petrochemical Corporation |
136,042 | | ||||||||||||||
16,503,809 | | |||||||||||||||
Other investments |
10,436,600 | | ||||||||||||||
$ | 76,877,217 | $ | 37,978,462 | |||||||||||||
The Companys investee, VIS, reduced its capital on August 11, 2004 in order to decrease its accumulated deficit. The number of shares of VIS held by the Company after the capital reduction declined from 787,016 thousand shares to 409,532 thousand shares.
For the three months ended March 31, 2005 and 2004, net investment loss and income recognized from the equity method investees was NT$198,178 thousand and NT$802,676 thousand, respectively. The carrying amounts of investments accounted for under the equity method and the related investment loss or income were determined based on the reviewed financial statements of the investees as of and for the same periods as the Company.
As of March 31, 2005, other investments consisted of the following:
Principal | Carrying | Range of | ||||||||||||||
Amount | Amount | Interest Rates | Maturity Date | |||||||||||||
Step-up callable deposits
|
||||||||||||||||
Domestic bank |
$ | 2,000,000 | $ | 2,007,551 | 2.05%-2.20 | % | Jul. 2007 to Aug. 2007 | |||||||||
Foreign bank |
1,500,000 | 1,507,988 | 1.44%-2.47 | % | Jul. 2006 to Jul. 2007 | |||||||||||
Callable range accrual deposits |
||||||||||||||||
Foreign bank |
6,936,600 | 7,028,330 | (See below) | Sep. 2009 to Jan.2010 | ||||||||||||
$ | 10,436,600 | $ | 10,543,869 | |||||||||||||
-14-
The interest rates of the structured time-deposits are determined as follows: | ||||
The interest rate of the step-up callable deposits is determined by the Company and the related banks. | ||||
The amount of interest earned by the Company for the callable range accrual deposits is based on a pre-defined range as determined by the 3-month or 6-month LIBOR rate plus an agreed upon rate ranging between 2.1% and 3.45%. Based on the terms of the deposits, if the 3-month or 6-month LIBOR rate moves outside of the pre-defined range, the interest paid to the Company is at a fixed rate between zero and 1.5%. Under the term of the contracts, the bank has the right to cancel the contracts prior to the maturity date. | ||||
Deposits that reside in banks located in Hong Kong and Singapore amounted to NT$2,522,400 thousand and NT$630,600 thousand, respectively. | ||||
7. | PROPERTY, PLANT AND EQUIPMENT | |||
Accumulated depreciation consisted of the following: |
March 31 | ||||||||
2005 | 2004 | |||||||
Buildings |
$ | 37,351,006 | $ | 30,913,778 | ||||
Machinery and equipment |
273,182,396 | 226,723,846 | ||||||
Office equipment |
4,921,126 | 4,040,821 | ||||||
$ | 315,454,528 | $ | 261,678,445 | |||||
There was no capitalized interest for the three months ended March 31, 2005. Interest expense for the three months ended March 31, 2004 was NT$382,150 thousand (before deducting the amount capitalized of NT$51,978 thousand for the three months ended March 31, 2004). The interest rate used for purposes of calculating the capitalized amount was 2.80% to 5.283% for the three months ended March 31, 2004. | ||||
8. | DEFERRED CHARGES, NET |
March 31 | ||||||||
2005 | 2004 | |||||||
Technology license fees |
$ | 6,264,489 | $ | 4,789,827 | ||||
Software and system design costs |
2,050,497 | 2,589,038 | ||||||
Other |
123,543 | 123,641 | ||||||
$ | 8,438,529 | $ | 7,502,506 | |||||
-15-
9. BONDS PAYABLE
March 31 | ||||||||
2005 | 2004 | |||||||
Domestic unsecured bonds: |
||||||||
Issued in October 1999 and repayable in October 2004, 5.95% interest
payable annually |
$ | | $ | 5,000,000 | ||||
Issued in December 2000 and repayable in December 2005 and 2007
in two equal payments, 5.25% and 5.36% interest payable annually,
respectively |
15,000,000 | 15,000,000 | ||||||
Issued in January 2002 and repayable in January 2007, 2009 and 2012
in three equal payments, 2.60%, 2.75% and 3% interest payable
annually, respectively |
15,000,000 | 15,000,000 | ||||||
$ | 30,000,000 | $ | 35,000,000 | |||||
As of March 31, 2005, future principal repayments for the Companys bonds were as follows:
Year of Repayment | Amount | |||
2005 (2nd to 4th quarter) |
$ | 10,500,000 | ||
2007 |
7,000,000 | |||
2009 |
8,000,000 | |||
2010 and thereafter |
4,500,000 | |||
30,000,000 | ||||
Current portion |
(10,500,000 | ) | ||
$ | 19,500,000 | |||
10. | OTHER LONG-TERM PAYABLES | |||
The Company entered into several license arrangements for certain semiconductor-related patents. Future payments under the agreements as of March 31, 2005 were as follows: |
Year of Payment | Amount | |||
2005 (2nd to 4th quarter) |
$ | 1,384,330 | ||
2006 |
564,533 | |||
2007 |
441,420 | |||
2008 |
252,240 | |||
2009 |
252,240 | |||
2010 and thereafter |
504,480 | |||
3,399,243 | ||||
Current portion (under accrued expenses and other current liabilities) |
(1,487,737 | ) | ||
$ | 1,911,506 | |||
-16-
11. | PENSION PLAN | |||
The Company has a defined benefit plan for all regular employees that provides benefits based on the employees length of service and average monthly salary or wage for the six-month period prior to retirement. | ||||
The Company contributes an amount equal to 2% of salaries and wages paid each month to a pension fund (the Fund). The Fund is administered by a pension fund monitoring committee (the Committee) and deposited in the Committees name in the Central Trust of China. | ||||
For the three months ended March 31, 2005 and 2004, the changes in the Fund and accrued pension cost are summarized as follows: |
Three Months Ended | ||||||||
March 31 | ||||||||
2005 | 2004 | |||||||
Pension fund |
||||||||
Balance, beginning of period |
$ | 1,428,001 | $ | 1,191,702 | ||||
Contribution |
76,474 | 68,041 | ||||||
Interest |
15,629 | 15,562 | ||||||
Payment |
(8,416 | ) | | |||||
Balance, end of period |
$ | 1,511,688 | $ | 1,275,305 | ||||
Accrued pension cost |
||||||||
Balance, beginning of period |
$ | 3,101,196 | $ | 2,600,251 | ||||
Accruals |
139,147 | 113,781 | ||||||
Balance, end of period |
$ | 3,240,343 | $ | 2,714,032 | ||||
The Labor Pension Act will be effective beginning July 1, 2005 and this pension mechanism is deemed a defined contribution plan. The employees who were subject to the Labor Standards Law prior to the enforcement of this Act may choose to be subject to the pension mechanism under this Act or may continue to be subject to the pension mechanism under the Labor Standards Law. For those employees who were subject to the Labor Standards Law prior to July 1, 2005 and still work for the same company after July 1, 2005 and choose to be subject to the pension mechanism under this Act, their seniority as of July 1, 2005 shall be maintained. The rate of contribution by an employer to the Labor Pension Fund per month shall not be less than 6% of each employees monthly salary or wage. | ||||
12. | INCOME TAX | |||
a. | A reconciliation of income tax expense based on income before income tax at statutory rate and income tax credits was as follows: |
Three Months Ended | ||||||||
March 31 | ||||||||
2005 | 2004 | |||||||
Income tax expense based on income before income tax at
statutory rate (25%) |
$ | (4,066,335 | ) | $ | (4,608,858 | ) | ||
Tax-exempt income |
2,236,484 | 2,774,533 | ||||||
Temporary and permanent differences |
(303,375 | ) | (137,367 | ) | ||||
Current income tax expense before income tax credits |
$ | (2,133,226 | ) | $ | (1,971,692 | ) | ||
-17-
b. Income tax benefit consisted of the following:
Three Months Ended | ||||||||
March 31 | ||||||||
2005 | 2004 | |||||||
Current income tax expense before income tax credits |
$ | (2,133,226 | ) | $ | (1,971,692 | ) | ||
Income tax credits |
2,133,226 | 1,971,692 | ||||||
Other income tax |
| (92 | ) | |||||
Net change in deferred income tax assets
|
||||||||
Investment tax credits |
2,557,893 | 960,679 | ||||||
Temporary differences |
799,837 | 807,088 | ||||||
Net change in valuation allowance of deferred income tax assets |
(2,804,674 | ) | (1,413,906 | ) | ||||
Income tax benefit |
$ | 553,056 | $ | 353,769 | ||||
c. Net deferred income tax assets consisted of the following:
March 31 | ||||||||
2005 | 2004 | |||||||
Current deferred income tax assets
|
||||||||
Investment tax credits |
$ | 7,296,000 | $ | 8,212,000 | ||||
Noncurrent deferred income tax assets, net
|
||||||||
Investment tax credits |
$ | 21,146,477 | $ | 18,398,573 | ||||
Temporary differences |
(1,650,698 | ) | (2,678,363 | ) | ||||
Valuation allowance |
(15,744,720 | ) | (14,185,753 | ) | ||||
$ | 3,751,059 | $ | 1,534,457 | |||||
d. | Integrated income tax information: | |||
The balance of the imputation credit account (ICA) as of March 31, 2005 and 2004 was zero and NT$2,932 thousand, respectively. | ||||
The expected and actual creditable ratio for distribution of earnings of 2004 and 2003 was zero and 0.03%, respectively. | ||||
The imputation credit allocated to the shareholders is based on its balance as of the date of dividend distribution. The expected creditable ratio may be adjusted when the actual distribution of the imputation credits is made. | ||||
e. | All retained earnings generated prior to December 31, 1997 have been appropriated. |
-18-
f. | As of March 31, 2005, investment tax credits consisted of the following: |
Total | Remaining | |||||||||||
Creditable | Creditable | Expiry | ||||||||||
Regulation | Item | Amount | Amount | Year | ||||||||
Statute for Upgrading Industries |
Purchase
of machinery and equipment |
$ | 108,159 | $ | | 2005 | ||||||
4,886,439 | 4,886,439 | 2006 | ||||||||||
4,101,455 | 4,101,455 | 2007 | ||||||||||
10,404,632 | 10,404,632 | 2008 | ||||||||||
164,686 | 164,686 | 2009 | ||||||||||
$ | 19,665,371 | $ | 19,557,212 | |||||||||
Statute for Upgrading Industries |
Research
and development expenditures |
$ | 3,127,586 | $ | 1,102,519 | 2005 | ||||||
` |
3,346,930 | 3,346,930 | 2006 | |||||||||
1,976,913 | 1,976,913 | 2007 | ||||||||||
1,843,800 | 1,843,800 | 2008 | ||||||||||
493,528 | 493,528 | 2009 | ||||||||||
$ | 10,788,757 | $ | 8,763,690 | |||||||||
Statute for Upgrading Industries |
Personnel training | $ | 29,448 | $ | 29,448 | 2005 | ||||||
27,311 | 27,311 | 2006 | ||||||||||
26,780 | 26,780 | 2007 | ||||||||||
$ | 83,539 | $ | 83,539 | |||||||||
Statute for Upgrading Industries |
Investments
in important technology-based enterprises |
$ | 38,036 | $ | 38,036 | 2005 |
g. | The sales generated from the following expansion and construction of the Companys manufacturing plants are exempt from income tax: |
Tax-Exemption Period | ||
Construction of Fab 8 - module B |
2002 to 2005 | |
Expansion of Fab 2 - modules A and B, Fab 3 and Fab 4, Fab 5 and Fab 6 |
2003 to 2006 | |
Construction of Fab 12 |
2004 to 2007 |
h. | The tax authorities have examined income tax returns of the Company through 2001. However, the Company is contesting the assessment by the tax authority for 1992 and 1998. The Company believes that any additional assessment will not have a material adverse effect on the Company. |
-19-
13. | LABOR COST, DEPRECIATION AND AMORTIZATION |
Three Months Ended March 31, 2005 | ||||||||||||
Classified as | ||||||||||||
Classified as | Operating | |||||||||||
Cost of Sales | Expenses | Total | ||||||||||
Labor cost |
||||||||||||
Salary |
$ | 2,029,905 | $ | 836,497 | $ | 2,866,402 | ||||||
Labor and health insurance |
152,768 | 72,370 | 225,138 | |||||||||
Pension |
145,158 | 68,770 | 213,928 | |||||||||
Meal |
98,219 | 31,140 | 129,359 | |||||||||
Welfare benefit |
34,846 | 20,295 | 55,141 | |||||||||
Other |
26,925 | 5,825 | 32,750 | |||||||||
$ | 2,487,821 | $ | 1,034,897 | $ | 3,522,718 | |||||||
Depreciation |
$ | 15,164,392 | $ | 712,831 | $ | 15,877,223 | ||||||
Amortization |
$ | 328,014 | $ | 448,626 | $ | 776,640 | ||||||
Three Months Ended March 31, 2004 | ||||||||||||
Classified as | ||||||||||||
Classified as | Operating | |||||||||||
Cost of Sales | Expenses | Total | ||||||||||
Labor cost |
||||||||||||
Salary |
$ | 2,017,088 | $ | 918,282 | $ | 2,935,370 | ||||||
Labor and health insurance |
130,952 | 72,039 | 202,991 | |||||||||
Pension |
118,317 | 65,074 | 183,391 | |||||||||
Meal |
81,767 | 29,169 | 110,936 | |||||||||
Welfare benefit |
35,383 | 19,966 | 55,349 | |||||||||
Other |
30,015 | 4,009 | 34,024 | |||||||||
$ | 2,413,522 | $ | 1,108,539 | $ | 3,522,061 | |||||||
Depreciation |
$ | 13,654,587 | $ | 574,503 | $ | 14,229,090 | ||||||
Amortization |
$ | 287,314 | $ | 571,552 | $ | 858,866 | ||||||
14. | SHAREHOLDERS EQUITY | |||
The Company has issued a total of 668,351 thousand ADSs which are traded on the NYSE as of March 31, 2005. The number of common shares represented by the ADSs is 3,341,754 thousand shares (one ADS represents five common shares). | ||||
Capital surplus can only be used to offset a deficit under the Company Law. However, the capital surplus generated from donations and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds and the surplus from treasury stock transactions) may be appropriated as stock dividends once a year, which is restricted to a certain percentage of the paid in common stock of the Company. |
-20-
As of March 31, 2005 and 2004, capital surplus consisted of the following:
March 31 | ||||||||
2005 | 2004 | |||||||
From merger |
$ | 24,003,546 | $ | 24,132,297 | ||||
Additional paid-in capital |
23,077,544 | 23,172,550 | ||||||
From convertible bonds |
9,360,424 | 9,410,632 | ||||||
From long-term investments |
129,718 | 90,913 | ||||||
From treasury stock transactions |
3,090 | 54,432 | ||||||
Donations |
55 | 55 | ||||||
$ | 56,574,377 | $ | 56,860,879 | |||||
The Companys Articles of Incorporation as revised on December 21, 2004, provide that when allocating the net profits for each fiscal year, the Company shall first offset its losses in previous years and then set aside the following items accordingly:
a. | Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve has equaled the Companys total capital; | |||
b. | Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge; | |||
c. | Bonus to directors and supervisors and bonus to employees of the Company equal to 0.3% and not less than 1% of the remainder, respectively. The Company may issue stock bonuses to employees of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly authorized by the Board of Directors; | |||
d. | Any balance left over shall be allocated according to the resolution of the shareholders meeting. |
Profits of this Company may be distributed by way of cash dividend and/or stock dividend. Since the Company is in a capital-intensive industry at the steady growth stage of its business, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided however, the ratio for stock dividend shall not exceed 50% of total distribution.
Any appropriations of net income are recorded in the financial statement in the year of shareholder approval.
The appropriation for legal capital reserve is made until the reserve equals the aggregate par value of the Companys outstanding capital stock. The reserve can only be used to offset an accumulated deficit or be distributed as a stock dividend up to 50% of the reserve balance when the reserve balance has reached 50% of the aggregate par value of the issued capital stock of the Company.
A special capital reserve equivalent to the net debit balance of the other components of shareholders equity (for example, unrealized loss on long-term investments and cumulative translation adjustments, but excluding treasury stock) shall be made from unappropriated earnings pursuant to existing regulations promulgated by the R.O.C. Securities and Futures Bureau (SFB), formerly known as the Securities and Futures Commission. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses.
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The appropriations of earnings for 2004 and 2003 were approved in the board of directors meeting and the shareholders meeting on February 22, 2005 and May 11, 2004, respectively. The appropriations and dividends per share are as follows:
Dividends Per Share | ||||||||||||||||
Appropriation of Earnings | (NT$) | |||||||||||||||
For Fiscal | For Fiscal | For Fiscal | For Fiscal | |||||||||||||
Year 2004 | Year 2003 | Year 2004 | Year 2003 | |||||||||||||
Legal reserve |
$ | 8,820,201 | $ | 4,725,870 | ||||||||||||
Special reserve |
2,226,427 | (68,945 | ) | |||||||||||||
Employees profit sharing in cash |
3,086,215 | 681,628 | ||||||||||||||
Employees profit sharing in stock |
3,086,215 | 2,726,514 | ||||||||||||||
Cash dividends to preferred shareholders |
| 184,493 | $ | | $ | 0.35 | ||||||||||
Cash dividends to common shareholders |
46,504,097 | 12,159,971 | 2.0 | 0.60 | ||||||||||||
Stock dividends to common shareholders |
11,626,024 | 28,373,267 | 0.5 | 1.41 | ||||||||||||
Bonus to directors and supervisors in cash |
231,466 | 127,805 | ||||||||||||||
$ | 75,580,645 | $ | 48,910,603 | |||||||||||||
The amount of the above appropriation of earnings for 2003 is consistent with the resolution of the meeting of the board of directors on February 17, 2004. However, the Company Law prescribes that TSMC, as a holder of treasury stock, shall not participate in the appropriation of earnings. Therefore, the actual cash dividend per share and stock dividend per share are slightly more than those in the aforementioned resolution. The appropriation of earnings for 2004 has not yet been resolved by the shareholders. If the above bonus to employee, directors and supervisors had been paid in cash and charged against income for 2004 and 2003, the after income tax basic earnings per share for the years ended December 31, 2004 and 2003 would have decreased from NT$3.97 to NT$3.70 and NT$2.33 to NT$2.15, respectively. The shares distributed as a bonus to employees represented 1.33% and 1.35% of the Companys total outstanding common shares as of December 31, 2004 and 2003, respectively.
The above information about the appropriations of bonus to employees, directors and supervisors is available at Market Observation System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by the Company on earnings generated since January 1, 1998.
15. | STOCK-BASED COMPENSATION PLANS |
The Companys Employee Stock Option Plans under the 2004 Plan, 2003 Plan and 2002 Plan were approved by the SFB of the R.O.C. on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The maximum number of units authorized to be granted under the 2004 Plan, the 2003 Plan and the 2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each unit eligible to subscribe to one common share when exercisable. The options may be granted to qualified employees of the Company or any of its domestic or foreign subsidiaries, in which the Companys shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The options of all the plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, the options are granted at an exercise price equal to the closing price of the Companys common shares listed on the TSE on the grant date.
Under the 2003 Plan and the 2002 Plan, units that had never been granted, or had been granted and subsequently cancelled were expired as of March 31, 2005.
Information about outstanding stock options for the three months ended March 31, 2005 and 2004 was as
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follows:
Weighted- | ||||||||
Number of | Average | |||||||
Outstanding | Exercise | |||||||
Stock Options | Price | |||||||
(In Thousands) | (NT$) | |||||||
Three months ended March 31, 2005 |
||||||||
Beginning outstanding balance |
64,367 | 44.1 | ||||||
Options exercised |
(899 | ) | 41.2 | |||||
Options cancelled |
(1,688 | ) | 44.7 | |||||
Ending outstanding balance |
61,780 | 44.1 | ||||||
Three months ended March 31, 2004 |
||||||||
Beginning outstanding balance |
49,357 | 43.0 | ||||||
Options granted |
16 | 55.2 | ||||||
Options exercised |
| | ||||||
Options cancelled |
(1,374 | ) | 44.3 | |||||
Ending outstanding balance |
47,999 | 42.9 | ||||||
The number of outstanding options and exercise prices have been adjusted to reflect the distribution of stock dividends in accordance with the plans.
As of March 31, 2005, information about outstanding and exercisable options was as follows:
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Number of | average | average | Number of | average | ||||||||||||||||
Range of | Outstanding | Remaining | Exercise | Exercisable | Exercise | |||||||||||||||
Exercise | Options (in | Contractual | Price | Options (in | Price | |||||||||||||||
Price (NT$) | Thousands) | Life (Years) | (NT$) | Thousands) | (NT$) | |||||||||||||||
32.8-46.2 |
49,754 | 7.84 | 42.6 | 13,153 | 39.4 | |||||||||||||||
49.9-57.8 |
12,026 | 9.08 | 50.4 | | | |||||||||||||||
61,780 | 8.09 | 44.1 | 13,153 | 39.4 | ||||||||||||||||
No compensation cost was recognized for the three months ended March 31, 2005 and 2004 as all options were granted at the closing price on the date of grant. Had the Company used the fair value based method to evaluate the options granted after January 1, 2004, the method, assumptions and pro forma results of the Company would have been as follows:
Method: | Black-Scholes Model | |||
Assumptions: |
||||
Expected dividend yield |
1.00 | % | ||
Expected volatility |
43.77%-46.15 | % | ||
Risk free interest rate |
3.07%-3.85 | % | ||
Expected life |
5 years |
-23-
Net income: |
||||
Net income as reported |
$ | 16,818,397 | ||
Pro forma net income |
16,798,577 | |||
Earnings per share (EPS) after income tax (NT$): |
||||
Basic EPS as reported |
0.72 | |||
Pro forma basic EPS |
0.72 | |||
Diluted EPS as reported |
0.72 | |||
Pro forma diluted EPS |
0.72 |
No options were granted during the three months ended March 31, 2005. The estimated weighted average fair value for the options granted during the three months ended March 31, 2004 was NT$24.49 per unit.
16. | TREASURY STOCK |
(Shares in Thousands) | ||||||||||||||||
Beginning | Ending | |||||||||||||||
Shares | Increase | Decrease | Shares | |||||||||||||
Three months ended March 31, 2005 |
||||||||||||||||
Reclassification of parent company stock held by
subsidiaries from long-term investments |
45,521 | | 484 | 45,037 | ||||||||||||
Three months ended March 31, 2004 |
||||||||||||||||
Reclassification of parent company stock held by
subsidiaries from long-term investments |
40,597 | | 146 | 40,451 | ||||||||||||
Repurchase under share buyback plan |
| 8,067 | | 8,067 | ||||||||||||
40,597 | 8,067 | 146 | 48,518 | |||||||||||||
Proceeds from the sales of treasury stock for the three months ended March 31, 2005 and 2004 were NT$26,044 thousand and NT$9,364 thousand, respectively. The Companys capital stock held by a subsidiary as an investment is recorded as treasury stock, with the holder having the same rights as other common shareholders. As of March 31, 2005 and 2004, the book value of the treasury stock was NT$1,572,027 thousand and NT$1,625,240 thousand, respectively; the market value was NT$2,336,080 thousand and NT$2,512,417 thousand, respectively.
The Company held a special meeting of the board of directors and approved a share buyback plan to repurchase the Companys common shares listed on the TSE during the period from March 24, 2004 to May 23, 2004. The Company repurchased 124,720 thousand common shares for a total cost of NT$7,059,798 thousand. All the treasury stock repurchased under the buyback plan was retired on August 16, 2004.
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17. | EARNINGS PER SHARE |
EPS is computed as follows:
Number of | EPS (NT$) | |||||||||||||||||||
Amounts (Numerator) | Shares | Before | After | |||||||||||||||||
Before | After | (Denominator) | Income | Income | ||||||||||||||||
Income Tax | Income Tax | (in Thousands) | Tax | Tax | ||||||||||||||||
Three months ended March 31, 2005 |
||||||||||||||||||||
Basic EPS |
||||||||||||||||||||
Income available to common shareholders |
$ | 16,265,341 | $ | 16,818,397 | 23,206,939 | $ | 0.70 | $ | 0.72 | |||||||||||
Effect of dilutive potential common stock stock
options |
| | 8,486 | |||||||||||||||||
Diluted EPS |
||||||||||||||||||||
Income available to common shareholders (including
effect of dilutive potential common stock) |
$ | 16,265,341 | $ | 16,818,397 | 23,215,425 | $ | 0.70 | $ | 0.72 | |||||||||||
Three months ended March 31, 2004 |
||||||||||||||||||||
Basic EPS |
||||||||||||||||||||
Income available to common shareholders |
$ | 18,435,433 | $ | 18,789,202 | 23,330,079 | $ | 0.79 | $ | 0.81 | |||||||||||
Effect of dilutive potential common stock stock
options |
| | 12,034 | |||||||||||||||||
Diluted EPS |
||||||||||||||||||||
Income available to common shareholders (including
effect of dilutive potential common stock) |
$ | 18,435,433 | $ | 18,789,202 | 23,342,113 | $ | 0.79 | $ | 0.80 | |||||||||||
18. | RELATED PARTY TRANSACTIONS |
The Company engages in business transactions with the following related parties:
a. | Industrial Technology Research Institute (ITRI), the chairman of the Company is one of its directors. | |||
b. | Philips, a major shareholder of the Company. | |||
c. | Subsidiaries | |||
TSMC-Shanghai TSMC-North America TSMC-Europe TSMC-Japan |
||||
d. | Investees | |||
GUC (with controlling financial interest) VisEra (with controlling financial interest) VIS SSMC |
||||
e. | Indirect subsidiaries | |||
WaferTech, LLC (WaferTech) TSMC Technology, Inc. (TSMC Technology) |
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The transactions with the aforementioned parties in addition to those disclosed in other notes are summarized as follows:
2005 | 2004 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
For the three months ended March 31 |
||||||||||||||||
Sales |
||||||||||||||||
TSMC-North America |
$ | 31,759,070 | 56 | $ | 31,648,127 | 54 | ||||||||||
Philips and its affiliates |
469,031 | 1 | 1,344,714 | 2 | ||||||||||||
Others |
101,362 | | 76,108 | | ||||||||||||
$ | 32,329,463 | 57 | $ | 33,068,949 | 56 | |||||||||||
Purchases |
||||||||||||||||
WaferTech |
$ | 2,514,006 | 32 | $ | 3,505,826 | 35 | ||||||||||
SSMC |
1,053,623 | 13 | 1,390,078 | 14 | ||||||||||||
VIS |
1,013,490 | 13 | 1,873,410 | 19 | ||||||||||||
Others |
73,752 | 1 | | | ||||||||||||
$ | 4,654,871 | 59 | $ | 6,769,314 | 68 | |||||||||||
Manufacturing expenses technical assistance fees
Philips (Note 20a) |
$ | 11,391 | | $ | 796,251 | 3 | ||||||||||
Marketing expenses commission |
||||||||||||||||
TSMC-Japan |
$ | 55,692 | 20 | $ | 57,523 | 19 | ||||||||||
TSMC-Europe |
44,797 | 16 | 39,849 | 13 | ||||||||||||
$ | 100,489 | 36 | $ | 97,372 | 32 | |||||||||||
General and administrative expenses rental expense |
||||||||||||||||
GUC |
$ | 3,976 | | $ | | | ||||||||||
Sales of property, plant and equipment |
||||||||||||||||
TSMC-Shanghai |
$ | 36,469 | 30 | $ | | | ||||||||||
VIS |
| | 29,399 | 43 | ||||||||||||
$ | 36,469 | 30 | $ | 29,399 | 43 | |||||||||||
Non-operating income and gains |
||||||||||||||||
SSMC (primarily technical service income, see
Note 20f) |
$ | 62,342 | 4 | $ | 56,983 | 4 | ||||||||||
VIS (primarily technical service income, see Note 20k) |
32,303 | 2 | 27,757 | 2 | ||||||||||||
Others |
5,411 | | 409 | | ||||||||||||
$ | 100,056 | 6 | $ | 85,149 | 6 | |||||||||||
At March 31 |
||||||||||||||||
Receivables |
||||||||||||||||
TSMC-North America |
$ | 13,822,886 | 98 | $ | 15,131,221 | 93 | ||||||||||
Philips and its affiliates |
179,348 | 1 | 1,021,009 | 6 | ||||||||||||
Others |
77,248 | 1 | 49,048 | 1 | ||||||||||||
$ | 14,079,482 | 100 | $ | 16,201,278 | 100 | |||||||||||
(Continued)
-26-
2005 | 2004 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
Other receivables |
||||||||||||||||
TSMC-Shanghai |
$ | 1,553,163 | 59 | $ | | | ||||||||||
TSMC-Technology |
570,601 | 22 | 2,418 | 1 | ||||||||||||
TSMC-North America |
377,009 | 14 | 64,100 | 26 | ||||||||||||
VIS |
34,850 | 1 | 180,829 | 73 | ||||||||||||
Others |
109,798 | 4 | 2,021 | | ||||||||||||
$ | 2,645,421 | 100 | $ | 249,368 | 100 | |||||||||||
Payables |
||||||||||||||||
Philips and its affiliates |
$ | 1,032,341 | 36 | $ | 1,892,900 | 39 | ||||||||||
WaferTech |
735,306 | 26 | 1,154,689 | 24 | ||||||||||||
VIS |
636,782 | 22 | 1,294,952 | 26 | ||||||||||||
SSMC |
337,355 | 12 | 528,454 | 11 | ||||||||||||
Others |
121,705 | 4 | 55,016 | | ||||||||||||
$ | 2,863,489 | 100 | $ | 4,926,011 | 100 | |||||||||||
Other long-term payables |
||||||||||||||||
Philips and its affiliates |
$ | 1,722,326 | 100 | $ | | | ||||||||||
Deferred gain on intercompany sale |
||||||||||||||||
TSMC-Shanghai (disposal of property, plant and
equipment) |
$ | 684,423 | 100 | $ | | | ||||||||||
The terms of sales to related parties are not significantly different from those to third parties. For other related party transactions, prices are determined in accordance with the related contractual agreements.
19. | SIGNIFICANT LONG-TERM LEASES |
The Company leases land from the Science-Based Industrial Park Administration. These lease agreements expire on various dates from March 2008 to December 2020 and can be renewed upon their expiration.
As of March 31, 2005, future remaining lease payments were as follows:
Year | Amount | |||
2005 (2nd to 4th quarter) |
$ | 182,867 | ||
2006 |
243,823 | |||
2007 |
243,823 | |||
2008 |
225,658 | |||
2009 |
219,603 | |||
2010 and thereafter |
1,231,777 | |||
$ | 2,347,551 | |||
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20. | SIGNIFICANT COMMITMENTS AND CONTINGENCIES |
The significant commitments and contingencies of the Company as of March 31, 2005 are as follows:
a. | On June 20, 2004, the Company and Philips revised the Technical Cooperation Agreement, which was originally signed on May 12, 1997, with an effective date from January 1, 2004 for five years. Upon expiration, this amended Technical Cooperation Agreement will be terminated at the expiration date and will not be automatically renewed. Under this amended Technical Cooperation Agreement, the Company will pay Philips royalties based on a fixed amounts mutually agreed-on, rather than under certain percentage of the Companys annual net sales. The Company and Philips agree to cross license the patents owned by each party. The Company also obtained through Philips a number of patent cross licenses. | |||
b. | Under a technical cooperation agreement with ITRI, the Company shall reserve and allocate up to 35% of certain of its production capacity for use by the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA. The term of this agreement is for five years beginning January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise terminated by either party with one year prior notice. The agreement was automatically renewed in 1992 and 1997 and on January 1, 2002. | |||
c. | On October 28, 1992, the Company entered into a letter agreement with Philips under which Philips has an option on up to 30% of the Companys capacity as agreed in the agreement on most favored terms and conditions for similar orders, as long as Philips and its affiliates shareholding in the Company remains at 24.8% or higher. As of March 12, 2005, Philips and its affiliates shareholding in the Company is 18.98%. | |||
d. | Under several foundry agreements, the Company shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with the Company. As of March 31, 2005, the Company had a total of US$11,645 thousand of guarantee deposits. | |||
e. | Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, for the purpose of constructing an integrated circuit foundry in Singapore. As of March 31, 2005, the Companys equity interest in SSMC was 32%. The Company and Philips committed to buy specific percentages of the production capacity of SSMC. The Company and Philips are required, in the aggregate, to purchase up to 70% of SSMCs full capacity, but the Company along is not required to purchase more than 28% of the annual installed capacity. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its total capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs. | |||
f. | The Company provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12, 1999. The Company receives compensation for such services computed at a specific percentage of net selling price of certain products sold by SSMC. The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions. | |||
g. | Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000, the Company shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten years and could be automatically renewed for successive periods of two years thereafter unless either party gives notice for early termination under certain conditions. In January 2003, the Company and National entered into a Termination Agreement whereby the TTA was terminated for convenience. Under the Termination Agreement, the Company will be relieved of any further obligation to transfer any additional technology. In addition, the Company granted National an option to request the transfer of certain technologies under the same terms and conditions as the terminated TTA. The option will expire in January 2008. |
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h. | Beginning in 2001, the Company entered into several licensing arrangements for certain semiconductor patents. The terms of the contracts range from five to ten years with payments to be made in the form of royalties over the term of the related contracts. The Company has recorded the related amounts as a liability with the corresponding amounts recorded as deferred charges which are amortized and charged to cost of sales on a straight-line basis over the estimated life of the technology or the term of the contract, whichever is shorter. | |||
i. | In November 2002, the Company entered into an Amended and Restated Joint Technology Cooperation Agreement with Philips, Freescale Semiconductor, Inc. and STMicroelectronics to jointly develop 90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. The Company also agreed to align 0.12 micron CMOS Logic technology to enhance its foundry business opportunities. The Company will contribute process technologies and share a portion of the costs associated with this joint development project. | |||
j. | In December 2003, the Company entered into a Technology Development and License Agreement with Freescale Semiconductor, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology. The Company will also license related 90-nm SOI technology from Freescale Semiconductor, Inc. Any intellectual properties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agreement, the Company will pay royalties to Freescale Semiconductor, Inc. and will share a portion of the costs associated with the joint development project. | |||
k. | The Company provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into in August 2004. The Company receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific percentages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for the Company certain products at prior as agreed by the parties. | |||
l. | Amounts available under unused letters of credit as of March 31, 2005 were NT$6,480 thousand and US$204 thousand. | |||
m. | The Company provided guarantees on loans amounting to US$60,000 thousand and US$40,000 thousand for TSMC Development, Inc. (TSMC Development) and TSMC-North America, respectively. | |||
n. | TSMC, TSMC-North America and WaferTech filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in California and with the U.S. International Trade Commission against Semiconductor Manufacturing International Corporation (SMIC), SMIC (Shanghai) and SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and misappropriated TSMCs trade secrets. These suits have been settled out of court on January 30, 2005. As part of the settlement, SMIC will pay TSMC US$175 million over six years to resolve TSMCs patent infringement and trade secret claims. |
21. | ADDITIONAL DISCLOSURES |
Following are the additional disclosures required by the SFB for the Company and its investees:
a. | Financing provided: Please see Table 1 attached; | |||
b. | Endorsement/guarantee provided: Please see Table 2 attached; | |||
c. | Marketable securities held: Please see Table 3 attached; | |||
d. | Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached; |
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e. | Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: None; | |||
f. | Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None; | |||
g. | Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached; | |||
h. | Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 6 attached; | |||
i. | Names, locations, and related information of investees on which the Company exercises significant influence: Please see Table 7 attached; | |||
j. | Financial instrument transactions: |
1) | Derivative financial instruments | |||
The Company entered into derivative financial instrument transactions during the three months ended March 31, 2005 and 2004 to manage exposures related to foreign-exchange rate and interest rate fluctuations. Certain information on these contracts was as follows: |
a) | Outstanding forward exchange contracts as of March 31, 2005 and 2004 |
Contract | ||||||||
Financial | Amount | |||||||
Instruments | Currency | Maturity | (In Thousands) | |||||
March 31, 2005 |
||||||||
Sell |
US$/NT$ | Apr. 2005 to Jun. 2005 | US$ | 708,000 | ||||
Buy |
US$/NT$ | Apr. 2005 | US$ | 40,000 | ||||
March 31, 2004 |
||||||||
Sell |
US$/NT$ | Apr. 2004 to Sep. 2004 | US$ | 1,755,000 | ||||
Buy |
EUR/US$ | Apr. 2004 | EUR | 16,000 | ||||
Buy |
JPY/US$ | Apr. 2004 | JPY | 528,225 |
As of March 31, 2005 and 2004, receivables from forward exchange contracts (included in the other financial assets account) aggregated approximately NT$4,661 thousand and NT$906,882 thousand, respectively; payables from forward exchange contracts (included in the other current liabilities account) aggregated approximately NT$280,637 thousand and zero, respectively.
b) | Cross currency swap contracts | |||
Outstanding cross currency swap contracts as of March 31, 2005 were as follows: |
Contract | Range of | Range of | ||||||||||
Amount | Interest Rate | Interest Rate | ||||||||||
Maturity Date | (In Thousands) | Paid | Received | |||||||||
Apr. 2005 to Jun. 2005 |
US$ | 1,395,000 | 1.28%-3.07 | % | 0.49%-1.15 | % |
There were no cross currency swap contracts during the three months ended March 31, 2004. |
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As of March 31, 2005, receivables and payables from the cross currency swap contracts (included in the other financial assets and other current liabilities account, respectively) was approximately NT$174,470 thousand and NT$468,220 thousand, respectively. | ||||
The net exchange gain or loss arising from forward exchange contracts and cross currency swap contracts for the three months ended March 31, 2005 and 2004 was recognized in the foreign exchange loss, net account and the difference in interest was recorded in interest income or expense. | ||||
c) | Interest rate swap contracts | |||
The contracts, which would have remained outstanding as of March 31, 2005, had been rescinded during the three months ended March 31, 2005. The rescission loss of NT$28,295 thousand was recognized in the interest expense account. There was no outstanding contract as of March 31, 2005. | ||||
Outstanding contracts as of March 31, 2004 were as follows: |
Contract | ||||||
Amount | ||||||
Contract Date | Period | (In Thousands) | ||||
Jul. 1999 |
Jul. 1999 to Jun. 2004 | US$ 2,857 | ||||
Sep. 2003 |
Sep. 2003 to Dec. 2005 | NT$500,000 | ||||
Oct. 2003 |
Oct. 2003 to Dec. 2005 | NT$500,000 | ||||
Oct. 2003 |
Oct. 2003 to Dec. 2005 | NT$500,000 | ||||
Oct. 2003 |
Oct. 2003 to Dec. 2005 | NT$500,000 | ||||
Oct. 2003 |
Oct. 2003 to Dec. 2005 | NT$500,000 | ||||
Nov. 2003 |
Nov. 2003 to Dec. 2005 | NT$500,000 |
d) | Transaction risk |
i) | Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive fair values at the balance sheet date. The positive net settlement amount represents the loss incurred by the Company if the counter-parties breached the contracts. The banks, which are the counter-parties to the foregoing derivative financial instruments, are reputable financial institutions. Management believes its exposure related to the potential default by those counter-parties is low. | |||
ii) | Market price risk. All derivative financial instruments are intended as hedges for fluctuations in foreign exchange rates and interest rates. Gains or losses from these hedging instruments are likely to be offset by gains or losses from the hedged items. Interest rate risks are also controlled as the expected cost of capital is fixed. Thus, market price risks are believed to below. | |||
iii) | Cash flow risk and the amount and period of future cash needs. | |||
As of March 31, 2005, the Companys future cash needs for outstanding forward exchange contracts and cross currency swap contracts were as follows: |
Inflow | Outflow | |||||||
Term | (In Thousands) | (In Thousands) | ||||||
Within one year |
NT$65,770,604 | NT$1,261,940 | ||||||
US$ | 40,000 | US$ | 2,103,000 |
-31-
The Company has sufficient operating capital to meet the above cash needs. In addition, there will be corresponding cash inflow for the cash outflow. Therefore, the cash flow risk is low.
2) | Fair values of financial instruments were as follows: |
March 31, 2005 | March 31, 2004 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Non-derivative financial instruments |
||||||||||||||||
Assets |
||||||||||||||||
Short-term investments |
$ | 51,638,170 | $ | 51,638,170 | $ | 19,829,168 | $ | 19,905,368 | ||||||||
Long-term investments (securities
with market price) |
32,746,088 | 36,480,721 | 4,375,675 | 10,963,129 | ||||||||||||
Liabilities |
||||||||||||||||
Bonds payable (including current
portion) |
30,000,000 | 30,522,754 | 35,000,000 | 35,758,784 | ||||||||||||
Derivative financial instruments |
||||||||||||||||
Forward exchange contracts (sell) |
(243,945 | ) | (205,815 | ) | 900,111 | 961,743 | ||||||||||
Forward exchange contracts (buy) |
(1,188 | ) | (1,541 | ) | 6,771 | 318 | ||||||||||
Cross currency swap contracts |
(306,246 | ) | (331,511 | ) | | | ||||||||||
Interest rate swap contracts |
| | 13,954 | 36,038 |
The above financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payable to contractors and equipment suppliers. The carrying amounts of the aforementioned financial instruments reported in the balance sheet approximate their fair values.
The above financial instruments also exclude refundable deposits, guarantee deposits, long-term investments that do not have quoted market prices as well as other long-term payables. The future cash inflow and outflow of the deposits approximate their fair values. Some of long-term investments do not have quoted market prices; therefore, fair values for those long-term investments are not shown above. The fair value of other long-term payables is determined using the discounted value of expected cash flows, which approximates the carrying value.
Fair values of financial instruments were determined as follows:
a) | Fair value of short-term and publicly traded long-term investments is based on quoted market prices. | |||
b) | The fair value of bonds payable is the quoted market value. | |||
c) | Fair value of derivative financial instruments is the amount receivable from or payable to the counter-party if the contracts were terminated on the balance sheet date. |
The fair values of some financial and non-financial instruments were not included in the fair values disclosed above. Accordingly, the sum of the fair values of the financial instruments listed above does not represent the fair value of the Company as a whole.
-32-
k. | Information on investment in Mainland China |
1) | The name of the investee company in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, ratio of ownership, equity in the net gain or net loss, ending balance, amount received as earnings distributions from the investment, and the limitation on investment: Please see Table 8 attached. | |||
2) | Significant direct or indirect transactions with the investee company, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please see Note 18. |
-33-
TABLE 1
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
FINANCING PROVIDED |
||
FOR THE THREE MONTHS ENDED MARCH 31, 2005 |
||
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified) |
Maximum | Collateral | Financing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance for the | Financing Limit | Companys | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period | Ending Balance | Type of | Reasons for | for Each | Financing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Statement | (US$ in | (US$ in | Financing | Transaction | Short-term | Allowance for | Borrowing | Amount Limits | ||||||||||||||||||||||||||||||||||||||||||||||||||||
No. | Financing Name | Counter-party | Account | Thousand) | Thousand) | Interest Rate | (Note 1) | Amounts | Financing | Bad Debt | Item | Value | Company | (US$ in Thousand) | ||||||||||||||||||||||||||||||||||||||||||||||
1 |
TSMC International | TSMC Development | Other receivables | $ | 1,891,800 | $ | 1,891,800 | 1.50 | % | 2 | $ | | Operating capital | $ | | | $ | | N/A | $ | 31,150,639 | |||||||||||||||||||||||||||||||||||||||
( US$60,000 ) | (US$60,000 ) | ( US$987,968 ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Note 2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 |
TSMC Partners | TSMC Development | Other receivables | 2,522,400 | 2,522,400 | 1.50 | % | 2 | | Operating capital | | | | N/A | (Note 3) | |||||||||||||||||||||||||||||||||||||||||||||
( US$80,000 ) | ( US$80,000 ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 1: The No. 2 represents necessary for short-term financing. |
Note 2: Not exceeding the issued capital of the Company. |
Note 3: Generally not exceeding the issued capital of the Company, unless approved by all members of the board. |
-34-
TABLE 2
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE THREE MONTHS ENDED MARCH 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Counter-party | Ratio of Accumulated | ||||||||||||||||||||||||||||||||
Amount of Collateral | Maximum | ||||||||||||||||||||||||||||||||
Nature of | Limits on Each Counter-partys | Maximum | Value of Collateral | to Net Equity of the | Collateral/Guarantee | ||||||||||||||||||||||||||||
Endorsement/ | Relationship | Endorsement/ | Balance for the Period | Ending Balance | Property, Plant and | Latest Financial | Amounts Allowable | ||||||||||||||||||||||||||
No. | Guarantee Provider | Name | (Note 2) | Guarantee Amounts | (US$ in Thousand) | (US$ in Thousand) | Equipment | Statement | (Note 1) | ||||||||||||||||||||||||
0 |
The Company | TSMC Development | 3 | Not exceed 10% of | $ | 1,891,800 | $ | 1,891,800 | $ | | 0.46% | $103,838,370 | |||||||||||||||||||||
the net worth of | |||||||||||||||||||||||||||||||||
the Company, and | (US$60,000 ) | (US$60,000 ) | |||||||||||||||||||||||||||||||
TSMC-North America | 2 | also limiting to | | 0.30% | |||||||||||||||||||||||||||||
the total capital | 1,261,200 | 1,261,200 |
|||||||||||||||||||||||||||||||
issued of the | (US$40,000 | (US$40,000 ) | |||||||||||||||||||||||||||||||
endorsement/guarantee | |||||||||||||||||||||||||||||||||
company, unless | |||||||||||||||||||||||||||||||||
otherwise approved | |||||||||||||||||||||||||||||||||
by Board of | |||||||||||||||||||||||||||||||||
Directors. |
Note 1: | 25% of the net worth of the Company as of March 31, 2005. |
Note 2: | The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest. |
The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest. |
- 35 -
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
MARKETABLE SECURITIES HELD
MARCH 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
March 31, 2005 | ||||||||||||||||||||||||||||||
Market Value or | ||||||||||||||||||||||||||||||
Carrying Value | Net Asset Value | |||||||||||||||||||||||||||||
Relationship with | Financial Statement | Shares/Units | (US$ in | Percentage of | (US$ in | |||||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | the Company | Account | (In Thousand) | Thousand) | Ownership | Thousand) | Note | ||||||||||||||||||||||
The Company |
Government bonds | |||||||||||||||||||||||||||||
United States Treas NTS | | Short-term investment | | US$ | 109,478 | N/A | US$ | 108,605 | ||||||||||||||||||||||
2002 Government Bond Series B | | Long-term investment | | 360,050 | N/A | 359,305 | ||||||||||||||||||||||||
2003 Government Bond Series I | | Long-term investment | | 3,394,786 | N/A | 3,392,545 | ||||||||||||||||||||||||
2004 Government Bond Series A | | Long-term investment | | 2,349,664 | N/A | 2,350,862 | ||||||||||||||||||||||||
2004 Government Bond Series E | | Long-term investment | | 3,895,017 | N/A | 3,892,177 | ||||||||||||||||||||||||
2004 Kaohsiung Municipal Bond Series A | | Long-term investment | | 620,000 | N/A | 619,999 | ||||||||||||||||||||||||
2005 Government Bond Series A | | Long-term investment | | 1,200,000 | N/A | 1,201,130 | ||||||||||||||||||||||||
Bond funds | ||||||||||||||||||||||||||||||
JF Taiwan First Bond Fund | | Short-term investment | 84,886 | 1,151,462 | N/A | 1,166,010 | ||||||||||||||||||||||||
ABN AMRO Bond Fund | | Short-term investment | 134,906 | 1,956,175 | N/A | 1,985,099 | ||||||||||||||||||||||||
JF Taiwan Bond Fund | | Short-term investment | 78,698 | 1,153,209 | N/A | 1,172,869 | ||||||||||||||||||||||||
INVESCO R.O.C. Bond A Fund | | Short-term investment | 76,705 | 1,101,911 | N/A | 1,115,399 | ||||||||||||||||||||||||
Dresdner Bond DAM Fund | | Short-term investment | 69,303 | 771,617 | N/A | 783,786 | ||||||||||||||||||||||||
Barits Bond Fund | | Short-term investment | 76,640 | 900,000 | N/A | 910,701 | ||||||||||||||||||||||||
Shinkong Chi Shin Bond Fund | | Short-term investment | 151,594 | 2,100,000 | N/A | 2,122,634 | ||||||||||||||||||||||||
NITC Bond Fund | | Short-term investment | 3,764 | 600,000 | N/A | 604,762 | ||||||||||||||||||||||||
ABN AMRO Select Bond Fund | | Short-term investment | 18,235 | 200,000 | N/A | 201,849 | ||||||||||||||||||||||||
HSBC NTD Money Management Fund | | Short-term investment | 41,568 | 600,000 | N/A | 603,891 | ||||||||||||||||||||||||
Stock | ||||||||||||||||||||||||||||||
Taiwan Mask Corp. | | Short-term investment | 1,787 | 6,528 | | 28,267 | ||||||||||||||||||||||||
TSMC International | Subsidiary | Long-term investment | 987,968 | 23,184,094 | 100 | 23,184,094 | ||||||||||||||||||||||||
VIS | Investee | Long-term investment | 409,532 | 5,698,410 | 28 | 9,537,998 | ||||||||||||||||||||||||
TSMC Partners | Subsidiary | Long-term investment | 300 | 3,871,369 | 100 | 3,871,369 | ||||||||||||||||||||||||
SSMC | Investee | Long-term investment | 382 | 3,364,490 | 32 | 3,364,490 | ||||||||||||||||||||||||
TSMC-North America | Subsidiary | Long-term investment | 11,000 | 556,517 | 100 | 1,210,469 | Treasury stock of | |||||||||||||||||||||||
NT$653,952 thousand | ||||||||||||||||||||||||||||||
is deducted from | ||||||||||||||||||||||||||||||
the carrying value. | ||||||||||||||||||||||||||||||
GUC | Investee | Long-term investment | 39,040 | 396,716 | 47 | 421,141 | ||||||||||||||||||||||||
TSMC-Japan | Subsidiary | Long-term investment | 6 | 97,787 | 100 | 97,787 | ||||||||||||||||||||||||
VisEra | Investee | Long-term investment | 5,100 | 62,638 | 25 | 62,638 | ||||||||||||||||||||||||
TSMC-Europe | Subsidiary | Long-term investment | | 23,950 | 100 | 23,950 | ||||||||||||||||||||||||
United Industrial Gases Co., Ltd. | | Long-term investment | 16,783 | 193,584 | 10 | 295,359 | ||||||||||||||||||||||||
Shin-Etsu Handotai Taiwan Co., Ltd. | | Long-term investment | 10,500 | 105,000 | 7 | 177,511 |
(Continued)
- 36 -
March 31, 2005 | ||||||||||||||||||||||||||||||
Market Value or | ||||||||||||||||||||||||||||||
Carrying Value | Net Asset Value | |||||||||||||||||||||||||||||
Relationship with | Financial Statement | Shares/Units | (US$ in | Percentage of | (US$ in | |||||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | the Company | Account | (In Thousand) | Thousand) | Ownership | Thousand) | Note | ||||||||||||||||||||||
W.K. Technology Fund IV | | Long-term investment | 5,000 | $ | 50,000 | 2 | $ | 55,266 | ||||||||||||||||||||||
Hontung Venture Capital Co., Ltd. | | Long-term investment | 8,392 | 83,916 | 10 | 54,775 | ||||||||||||||||||||||||
Globaltop Partner I Venture Capital Corp. | | Long-term investment | 5,000 | 50,000 | 1 | 49,715 | ||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||||||
Taiwan Power Company | | Short-term investment | | 2,754,222 | N/A | 2,708,522 | ||||||||||||||||||||||||
Formosa Petrochemical Corporation | | Short-term investment | | 310,868 | N/A | 304,252 | ||||||||||||||||||||||||
AIG Sunamerica Global Fing IX | | Short-term investment | | US$ | 1,032 | N/A | US$ | 1,014 | ||||||||||||||||||||||
Anz Cap Tr I | | Short-term investment | | US$ | 1,012 | N/A | US$ | 979 | ||||||||||||||||||||||
Abbott Labs | | Short-term investment | | US$ | 2,732 | N/A | US$ | 2,648 | ||||||||||||||||||||||
Abbott Labs | | Short-term investment | | US$ | 1,581 | N/A | US$ | 1,551 | ||||||||||||||||||||||
Ace Ltd | | Short-term investment | | US$ | 1,046 | N/A | US$ | 1,025 | ||||||||||||||||||||||
Alltel Corp. | | Short-term investment | | US$ | 609 | N/A | US$ | 604 | ||||||||||||||||||||||
Allstate Life Global Fdg Secd | | Short-term investment | | US$ | 2,998 | N/A | US$ | 2,962 | ||||||||||||||||||||||
American Express Co. | | Short-term investment | | US$ | 3,550 | N/A | US$ | 3,452 | ||||||||||||||||||||||
American Gen Fin Corp. | | Short-term investment | | US$ | 1,768 | N/A | US$ | 1,711 | ||||||||||||||||||||||
American Gen Fin Corp. Mtn | | Short-term investment | | US$ | 3,130 | N/A | US$ | 3,051 | ||||||||||||||||||||||
American Gen Fin Corp. Mtn | | Short-term investment | | US$ | 1,058 | N/A | US$ | 1,026 | ||||||||||||||||||||||
American Honda Fin Corp. Mtn | | Short-term investment | | US$ | 3,800 | N/A | US$ | 3,806 | ||||||||||||||||||||||
American Intl Group Inc Mtnf | | Short-term investment | | US$ | 3,795 | N/A | US$ | 3,785 | ||||||||||||||||||||||
Amgen Inc. | | Short-term investment | | US$ | 3,005 | N/A | US$ | 2,920 | ||||||||||||||||||||||
Amsouth Bk Birmingham Ala | | Short-term investment | | US$ | 1,972 | N/A | US$ | 1,962 | ||||||||||||||||||||||
Associates Corp. North Amer | | Short-term investment | | US$ | 2,700 | N/A | US$ | 2,629 | ||||||||||||||||||||||
Bank New York Inc. | | Short-term investment | | US$ | 1,525 | N/A | US$ | 1,495 | ||||||||||||||||||||||
Bank New York Inc. | | Short-term investment | | US$ | 1,972 | N/A | US$ | 1,968 | ||||||||||||||||||||||
Bank Scotland Treas Svcs Plc | | Short-term investment | | US$ | 2,715 | N/A | US$ | 2,708 | ||||||||||||||||||||||
Bank Utd Houston Tx Mtbn | | Short-term investment | | US$ | 580 | N/A | US$ | 560 | ||||||||||||||||||||||
Bear Stearns Cos Inc. | | Short-term investment | | US$ | 3,518 | N/A | US$ | 3,477 | ||||||||||||||||||||||
Bear Stearns Cos Inc. Medium Te | | Short-term investment | | US$ | 3,105 | N/A | US$ | 3,106 | ||||||||||||||||||||||
Beneficial Corp. Mtn Bk Entry | | Short-term investment | | US$ | 2,434 | N/A | US$ | 2,392 | ||||||||||||||||||||||
Berkshire Hathaway Fin Corp. | | Short-term investment | | US$ | 1,498 | N/A | US$ | 1,474 | ||||||||||||||||||||||
British Telecommunications Plc | | Short-term investment | | US$ | 2,104 | N/A | US$ | 2,061 | ||||||||||||||||||||||
Cit Group Hldgs Inc. | | Short-term investment | | US$ | 3,203 | N/A | US$ | 3,116 | ||||||||||||||||||||||
Cit Group Inc. | | Short-term investment | | US$ | 2,000 | N/A | US$ | 2,003 | ||||||||||||||||||||||
Cargill Inc. | | Short-term investment | | US$ | 2,120 | N/A | US$ | 2,054 | ||||||||||||||||||||||
Chase Manhattan Corp. New | | Short-term investment | | US$ | 2,246 | N/A | US$ | 2,199 | ||||||||||||||||||||||
Chase Manhattan Corp. New | | Short-term investment | | US$ | 1,628 | N/A | US$ | 1,574 | ||||||||||||||||||||||
Citicorp. | | Short-term investment | | US$ | 1,473 | N/A | US$ | 1,446 | ||||||||||||||||||||||
Cogentrix Energy Inc. | | Short-term investment | | US$ | 2,885 | N/A | US$ | 2,827 | ||||||||||||||||||||||
Colonial Pipeline Co. | | Short-term investment | | US$ | 1,625 | N/A | US$ | 1,576 | ||||||||||||||||||||||
Compaq Computer Corp. | | Short-term investment | | US$ | 3,719 | N/A | US$ | 3,551 | ||||||||||||||||||||||
Consolidated Edison Co. Ny Inc. | | Short-term investment | | US$ | 3,688 | N/A | US$ | 3,576 | ||||||||||||||||||||||
Corestates Cap Corp. | | Short-term investment | | US$ | 1,062 | N/A | US$ | 1,044 | ||||||||||||||||||||||
Countrywide Fdg Corp. Mtn | | Short-term investment | | US$ | 2,158 | N/A | US$ | 2,108 | ||||||||||||||||||||||
Countrywide Home Lns Inc. | | Short-term investment | | US$ | 5,210 | N/A | US$ | 5,090 | ||||||||||||||||||||||
Countrywide Fdg Corp. Mtn | | Short-term investment | | US$ | 3,500 | N/A | US$ | 3,499 | ||||||||||||||||||||||
Countrywide Finl Corp. | | Short-term investment | | US$ | 3,000 | N/A | US$ | 2,999 |
(Continued)
- 37 -
March 31, 2005 | ||||||||||||||||||||||||||||||
Market Value or | ||||||||||||||||||||||||||||||
Carrying Value | Net Asset Value | |||||||||||||||||||||||||||||
Relationship with | Financial Statement | Shares/Units | (US$ in | Percentage of | (US$ in | |||||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | the Company | Account | (In Thousand) | Thousand) | Ownership | Thousand) | Note | ||||||||||||||||||||||
Credit Suisse Fb USA Inc. | | Short-term investment | | US$ | 4,141 | N/A | US$ | 4,106 | ||||||||||||||||||||||
Credit Suisse First Boston USA | | Short-term investment | | US$ | 2,249 | N/A | US$ | 2,185 | ||||||||||||||||||||||
Credit Suisse First Boston | | Short-term investment | | US$ | 786 | N/A | US$ | 763 | ||||||||||||||||||||||
Daimlerchrysler North Amer | | Short-term investment | | US$ | 997 | N/A | US$ | 973 | ||||||||||||||||||||||
Daimlerchrysler North Amer Hld | | Short-term investment | | US$ | 749 | N/A | US$ | 750 | ||||||||||||||||||||||
Dell Computer Corp. | | Short-term investment | | US$ | 3,054 | N/A | US$ | 2,954 | ||||||||||||||||||||||
Den Danske Bk Aktieselskab | | Short-term investment | | US$ | 2,192 | N/A | US$ | 2,125 | ||||||||||||||||||||||
Deutsche Telekom Intl Fin Bv | | Short-term investment | | US$ | 1,852 | N/A | US$ | 1,814 | ||||||||||||||||||||||
Diageo Plc | | Short-term investment | | US$ | 3,459 | N/A | US$ | 3,433 | ||||||||||||||||||||||
Dow Chem Co. | | Short-term investment | | US$ | 921 | N/A | US$ | 896 | ||||||||||||||||||||||
European Invt Bk | | Short-term investment | | US$ | 8,315 | N/A | US$ | 8,137 | ||||||||||||||||||||||
Fpl Group Cap Inc. | | Short-term investment | | US$ | 1,001 | N/A | US$ | 997 | ||||||||||||||||||||||
Fpl Group Cap Inc. | | Short-term investment | | US$ | 860 | N/A | US$ | 851 | ||||||||||||||||||||||
Shell Finance (U K ) Plc | | Short-term investment | | US$ | 3,604 | N/A | US$ | 3,524 | ||||||||||||||||||||||
Fifth Third Bk Cincinnati OH | | Short-term investment | | US$ | 2,419 | N/A | US$ | 2,421 | ||||||||||||||||||||||
First Data Corp. | | Short-term investment | | US$ | 3,013 | N/A | US$ | 2,919 | ||||||||||||||||||||||
First Un Corp. | | Short-term investment | | US$ | 970 | N/A | US$ | 943 | ||||||||||||||||||||||
Fleet Finl Group Inc New | | Short-term investment | | US$ | 494 | N/A | US$ | 486 | ||||||||||||||||||||||
Fleet Finl Group Inc New | | Short-term investment | | US$ | 975 | N/A | US$ | 943 | ||||||||||||||||||||||
Fleet Boston Corp. | | Short-term investment | | US$ | 2,850 | N/A | US$ | 2,776 | ||||||||||||||||||||||
Ford Mtr Cr Co. | | Short-term investment | | US$ | 153 | N/A | US$ | 151 | ||||||||||||||||||||||
Ford Mtr Cr Co. | | Short-term investment | | US$ | 1,542 | N/A | US$ | 1,515 | ||||||||||||||||||||||
Ford Mtr Cr Co. | | Short-term investment | | US$ | 616 | N/A | US$ | 608 | ||||||||||||||||||||||
Gte Corp. | | Short-term investment | | US$ | 2,134 | N/A | US$ | 2,085 | ||||||||||||||||||||||
General Elec Cap Corp. Mtn | | Short-term investment | | US$ | 3,315 | N/A | US$ | 3,303 | ||||||||||||||||||||||
General Elec Cap Corp. Mtn | | Short-term investment | | US$ | 1,040 | N/A | US$ | 1,025 | ||||||||||||||||||||||
General Re Corp. | | Short-term investment | | US$ | 3,500 | N/A | US$ | 3,541 | ||||||||||||||||||||||
Genworth Finl Inc. | | Short-term investment | | US$ | 3,412 | N/A | US$ | 3,409 | ||||||||||||||||||||||
Goldman Sachs Group LP | | Short-term investment | | US$ | 1,637 | N/A | US$ | 1,572 | ||||||||||||||||||||||
Greenpoint Finl Corp. | | Short-term investment | | US$ | 974 | N/A | US$ | 957 | ||||||||||||||||||||||
HSBC USA Inc. New | | Short-term investment | | US$ | 1,154 | N/A | US$ | 1,119 | ||||||||||||||||||||||
Hancock John Global Fdg Mtn | | Short-term investment | | US$ | 1,003 | N/A | US$ | 973 | ||||||||||||||||||||||
Hartford Finl Svcs Group Inc. | | Short-term investment | | US$ | 1,435 | N/A | US$ | 1,397 | ||||||||||||||||||||||
Hartford Finl Svcs Group Inc. | | Short-term investment | | US$ | 296 | N/A | US$ | 295 | ||||||||||||||||||||||
Heller Finl Inc. | | Short-term investment | | US$ | 1,171 | N/A | US$ | 1,133 | ||||||||||||||||||||||
Hershey Foods Corp. | | Short-term investment | | US$ | 1,627 | N/A | US$ | 1,576 | ||||||||||||||||||||||
Hewlett Packard Co. | | Short-term investment | | US$ | 3,373 | N/A | US$ | 3,258 | ||||||||||||||||||||||
Honeywell Inc. | | Short-term investment | | US$ | 3,284 | N/A | US$ | 3,162 | ||||||||||||||||||||||
Household Fin Corp. | | Short-term investment | | US$ | 532 | N/A | US$ | 525 | ||||||||||||||||||||||
Household Fin Corp. | | Short-term investment | | US$ | 2,993 | N/A | US$ | 2,927 | ||||||||||||||||||||||
Household Fin Corp. Mtn Bk Ent | | Short-term investment | | US$ | 3,542 | N/A | US$ | 3,493 | ||||||||||||||||||||||
Huntington Natl Bk Columbus OH | | Short-term investment | | US$ | 2,954 | N/A | US$ | 2,945 | ||||||||||||||||||||||
Huntington Natl Bk | | Short-term investment | | US$ | 3,003 | N/A | US$ | 3,002 | ||||||||||||||||||||||
ING Sec Life Instl Fdg | | Short-term investment | | US$ | 2,544 | N/A | US$ | 2,503 |
(Continued)
-38-
March 31, 2005 | ||||||||||||||||||||||||||||||
Market Value or | ||||||||||||||||||||||||||||||
Carrying Value | Net Asset Value | |||||||||||||||||||||||||||||
Relationship with | Financial Statement | Shares/Units | (US$ in | Percentage of | (US$ in | |||||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | the Company | Account | (In Thousand) | Thousand) | Ownership | Thousand) | Note | ||||||||||||||||||||||
Intl Bk For Recon + Dev | | Short-term investment | | US$ | 5,232 | N/A | US$ | 5,051 | ||||||||||||||||||||||
International Business Machs | | Short-term investment | | US$ | 2,249 | N/A | US$ | 2,220 | ||||||||||||||||||||||
Intl Lease Fin Corp. Mtn | | Short-term investment | | US$ | 3,028 | N/A | US$ | 2,954 | ||||||||||||||||||||||
JP Morgan Chase + Co | | Short-term investment | | US$ | 3,663 | N/A | US$ | 3,583 | ||||||||||||||||||||||
Jackson Natl Life Global Fdg | | Short-term investment | | US$ | 1,036 | N/A | US$ | 1,020 | ||||||||||||||||||||||
Jackson Natl Life Global Fdg S | | Short-term investment | | US$ | 2,998 | N/A | US$ | 3,003 | ||||||||||||||||||||||
KFW Intl Fin Inc. | | Short-term investment | | US$ | 3,062 | N/A | US$ | 3,002 | ||||||||||||||||||||||
Key Bk Na Med Term Nts Bk Entr | | Short-term investment | | US$ | 4,450 | N/A | US$ | 4,442 | ||||||||||||||||||||||
Keycorp Mtn Book Entry | | Short-term investment | | US$ | 3,500 | N/A | US$ | 3,511 | ||||||||||||||||||||||
Kraft Foods Inc. | | Short-term investment | | US$ | 773 | N/A | US$ | 759 | ||||||||||||||||||||||
Kraft Foods Inc. | | Short-term investment | | US$ | 1,037 | N/A | US$ | 1,023 | ||||||||||||||||||||||
ING Bank | | Short-term investment | | US$ | 2,114 | N/A | US$ | 2,073 | ||||||||||||||||||||||
Lehman Brothers Hldgs Inc. | | Short-term investment | | US$ | 1,163 | N/A | US$ | 1,129 | ||||||||||||||||||||||
Lehman Brothers Hldgs Inc. | | Short-term investment | | US$ | 3,705 | N/A | US$ | 3,589 | ||||||||||||||||||||||
Lehman Brothers Hldgs Inc. | | Short-term investment | | US$ | 2,166 | N/A | US$ | 2,124 | ||||||||||||||||||||||
Lilly Eli + Co. | | Short-term investment | | US$ | 3,750 | N/A | US$ | 3,750 | ||||||||||||||||||||||
Lincoln Natl Corp. In | | Short-term investment | | US$ | 519 | N/A | US$ | 509 | ||||||||||||||||||||||
Ameritech Capital Funding Co. | | Short-term investment | | US$ | 510 | N/A | US$ | 499 | ||||||||||||||||||||||
Merita Bk Ltd NY Brh | | Short-term investment | | US$ | 538 | N/A | US$ | 523 | ||||||||||||||||||||||
Merrill Lynch + Co. Inc. | | Short-term investment | | US$ | 3,486 | N/A | US$ | 3,430 | ||||||||||||||||||||||
Metropolitan Life Global Mtn | | Short-term investment | | US$ | 1,907 | N/A | US$ | 1,879 | ||||||||||||||||||||||
Monumental Global Fdg II | | Short-term investment | | US$ | 1,534 | N/A | US$ | 1,486 | ||||||||||||||||||||||
Monumental Global Fdg II 2002A | | Short-term investment | | US$ | 1,045 | N/A | US$ | 1,019 | ||||||||||||||||||||||
Morgan Stanley Group Inc. | | Short-term investment | | US$ | 3,638 | N/A | US$ | 3,587 | ||||||||||||||||||||||
Morgan Stanley Group Inc. | | Short-term investment | | US$ | 1,050 | N/A | US$ | 1,031 | ||||||||||||||||||||||
Morgan Stanley | | Short-term investment | | US$ | 2,136 | N/A | US$ | 2,075 | ||||||||||||||||||||||
National City Corp. | | Short-term investment | | US$ | 3,426 | N/A | US$ | 3,378 | ||||||||||||||||||||||
National Westminster Bk Plc | | Short-term investment | | US$ | 1,433 | N/A | US$ | 1,391 | ||||||||||||||||||||||
Nationwide Bldg Soc | | Short-term investment | | US$ | 3,457 | N/A | US$ | 3,446 | ||||||||||||||||||||||
Nationwide Bldg Soc Mtn | | Short-term investment | | US$ | 3,000 | N/A | US$ | 3,000 | ||||||||||||||||||||||
Nationwide Life Global Mtn | | Short-term investment | | US$ | 1,463 | N/A | US$ | 1,453 | ||||||||||||||||||||||
Northern Rock Plc Medium Term | | Short-term investment | | US$ | 2,002 | N/A | US$ | 1,994 | ||||||||||||||||||||||
Pnc Fdg Corp. | | Short-term investment | | US$ | 1,080 | N/A | US$ | 1,054 | ||||||||||||||||||||||
Ppg Inds Inc. | | Short-term investment | | US$ | 3,571 | N/A | US$ | 3,546 | ||||||||||||||||||||||
Pepsico Inc. Mtn Book Entry | | Short-term investment | | US$ | 3,818 | N/A | US$ | 3,747 | ||||||||||||||||||||||
Popular North Amer Inc. Mtn | | Short-term investment | | US$ | 3,042 | N/A | US$ | 2,965 | ||||||||||||||||||||||
Premark Intl Inc. | | Short-term investment | | US$ | 2,954 | N/A | US$ | 2,865 | ||||||||||||||||||||||
Pricoa Global Fdg I Mtn | | Short-term investment | | US$ | 3,050 | N/A | US$ | 3,052 | ||||||||||||||||||||||
Pricoa Global Fdg 1 Mtn | | Short-term investment | | US$ | 3,500 | N/A | US$ | 3,499 | ||||||||||||||||||||||
Principal Life Global Fdg I Gl | | Short-term investment | | US$ | 3,168 | N/A | US$ | 3,067 | ||||||||||||||||||||||
Protective Life Secd Trs | | Short-term investment | | US$ | 2,920 | N/A | US$ | 2,913 | ||||||||||||||||||||||
Prudential Ins Co. Amer | | Short-term investment | | US$ | 2,648 | N/A | US$ | 2,574 | ||||||||||||||||||||||
Reinsurance Group Amer Inc. | | Short-term investment | | US$ | 2,091 | N/A | US$ | 2,061 | ||||||||||||||||||||||
Royal Bk Scotland Group Plc | | Short-term investment | | US$ | 1,563 | N/A | US$ | 1,525 | ||||||||||||||||||||||
Royal Bk Scotland Group Plc | | Short-term investment | | US$ | 369 | N/A | US$ | 359 | ||||||||||||||||||||||
Sbc Communications Inc. | | Short-term investment | | US$ | 3,681 | N/A | US$ | 3,576 | ||||||||||||||||||||||
Sbc Communications Inc. | | Short-term investment | | US$ | 1,776 | N/A | US$ | 1,728 |
(Continued)
-39-
March 31, 2005 | ||||||||||||||||||||||||||||||
Market Value or | ||||||||||||||||||||||||||||||
Carrying Value | Net Asset Value | |||||||||||||||||||||||||||||
Relationship with | Financial Statement | Shares/Units | (US$ in | Percentage of | (US$ in | |||||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | the Company | Account | (In Thousand) | Thousand) | Ownership | Thousand) | Note | ||||||||||||||||||||||
Slm Corp Medium Term Nts | | Short-term investment | | US$ | 2,950 | N/A | US$ | 2,932 | ||||||||||||||||||||||
Slm Corp. | | Short-term investment | | US$ | 500 | N/A | US$ | 497 | ||||||||||||||||||||||
Sp Powerassests Ltd Global | | Short-term investment | | US$ | 991 | N/A | US$ | 974 | ||||||||||||||||||||||
Safeco Corp. | | Short-term investment | | US$ | 765 | N/A | US$ | 748 | ||||||||||||||||||||||
St Paul Cos Inc Mtn Bk Ent | | Short-term investment | | US$ | 2,661 | N/A | US$ | 2,635 | ||||||||||||||||||||||
Salomon Smith Barney Hldgs Inc. | | Short-term investment | | US$ | 3,160 | N/A | US$ | 3,065 | ||||||||||||||||||||||
Sara Lee Corp. | | Short-term investment | | US$ | 1,596 | N/A | US$ | 1,567 | ||||||||||||||||||||||
Scotland Intl Fin B V 144A | | Short-term investment | | US$ | 1,533 | N/A | US$ | 1,502 | ||||||||||||||||||||||
Suntrust Bks Inc. | | Short-term investment | | US$ | 1,062 | N/A | US$ | 1,044 | ||||||||||||||||||||||
Swedbank Sparbanken Svenge AB | | Short-term investment | | US$ | 1,084 | N/A | US$ | 1,050 | ||||||||||||||||||||||
Tiaa Global Mkts Inc. | | Short-term investment | | US$ | 519 | N/A | US$ | 507 | ||||||||||||||||||||||
Tribune Co. Med Trm Nts | | Short-term investment | | US$ | 2,943 | N/A | US$ | 2,898 | ||||||||||||||||||||||
US Bk Natl Assn Cincinnati OH | | Short-term investment | | US$ | 2,669 | N/A | US$ | 2,663 | ||||||||||||||||||||||
Unitedhealth Group Inc. | | Short-term investment | | US$ | 3,119 | N/A | US$ | 3,058 | ||||||||||||||||||||||
Virginia Elec + Pwr Co. | | Short-term investment | | US$ | 2,884 | N/A | US$ | 2,780 | ||||||||||||||||||||||
Vodafone Group Plc New | | Short-term investment | | US$ | 2,559 | N/A | US$ | 2,521 | ||||||||||||||||||||||
Wps Resources Corp. | | Short-term investment | | US$ | 1,107 | N/A | US$ | 1,100 | ||||||||||||||||||||||
Wal Mart Cda Venture Corp. | | Short-term investment | | US$ | 3,670 | N/A | US$ | 3,563 | ||||||||||||||||||||||
Washington Mut Inc. | | Short-term investment | | US$ | 4,735 | N/A | US$ | 4,613 | ||||||||||||||||||||||
Washington Mut Fin Corp. | | Short-term investment | | US$ | 4,768 | N/A | US$ | 4,628 | ||||||||||||||||||||||
Washington Post Co. | | Short-term investment | | US$ | 3,182 | N/A | US$ | 3,108 | ||||||||||||||||||||||
Wells Fargo+Co. New | | Short-term investment | | US$ | 3,697 | N/A | US$ | 3,587 | ||||||||||||||||||||||
Westfield Cap Corp. Ltd | | Short-term investment | | US$ | 1,999 | N/A | US$ | 2,003 | ||||||||||||||||||||||
China Steel Corporation | | Long-term investment | | 2,957,874 | N/A | 2,954,657 | ||||||||||||||||||||||||
Taiwan Power Company | | Long-term investment | | 911,967 | N/A | 911,637 | ||||||||||||||||||||||||
Nan Ya Plastics Corporation | | Long-term investment | | 406,072 | N/A | 406,068 | ||||||||||||||||||||||||
Formosa Plastics Corporation | | Long-term investment | | 272,336 | N/A | 412,830 | ||||||||||||||||||||||||
Formosa Petrochemical Corporation | | Long-term investment | | 136,042 | N/A | 200,000 | ||||||||||||||||||||||||
Agency bonds | ||||||||||||||||||||||||||||||
Fed Hm Ln Pc Pool G11295 | | Short-term investment | | US$ | 2,146 | N/A | US$ | 2,115 | ||||||||||||||||||||||
Fed Hm Ln Pc Pool E89857 | | Short-term investment | | US$ | 2,467 | N/A | US$ | 2,431 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 6,096 | N/A | US$ | 6,027 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 4,227 | N/A | US$ | 4,197 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp | | Short-term investment | | US$ | 3,558 | N/A | US$ | 3,497 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 3,155 | N/A | US$ | 3,121 | ||||||||||||||||||||||
Federal Natl Mtg Assn Gtd | | Short-term investment | | US$ | 2,595 | N/A | US$ | 2,547 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 3,624 | N/A | US$ | 3,589 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 1,609 | N/A | US$ | 1,594 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 4,165 | N/A | US$ | 4,111 | ||||||||||||||||||||||
Fnma Pool 685116 | | Short-term investment | | US$ | 946 | N/A | US$ | 931 | ||||||||||||||||||||||
Fnma Pool 725095 | | Short-term investment | | US$ | 1,904 | N/A | US$ | 1,872 | ||||||||||||||||||||||
Fnma Pool 790828 | | Short-term investment | | US$ | 4,500 | N/A | US$ | 4,410 |
(Continued)
-40-
March 31, 2005 | ||||||||||||||||||||||||||||||
Market Value or | ||||||||||||||||||||||||||||||
Carrying Value | Net Asset Value | |||||||||||||||||||||||||||||
Relationship with | Financial Statement | Shares/Units | (US$ in | Percentage of | (US$ in | |||||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | the Company | Account | (In Thousand) | Thousand) | Ownership | Thousand) | Note | ||||||||||||||||||||||
Fnma Pool 793932 | | Short-term investment | | US$ | 983 | N/A | US$ | 968 | ||||||||||||||||||||||
Fnma Pool 794040 | | Short-term investment | | US$ | 976 | N/A | US$ | 960 | ||||||||||||||||||||||
Fnma Pool 795548 | | Short-term investment | | US$ | 938 | N/A | US$ | 926 | ||||||||||||||||||||||
Fnma Pool 806642 | | Short-term investment | | US$ | 1,944 | N/A | US$ | 1,920 | ||||||||||||||||||||||
Government Natl Mtg Assn | | Short-term investment | | US$ | 1,007 | N/A | US$ | 983 | ||||||||||||||||||||||
Gnma II Pool 081150 | | Short-term investment | | US$ | 978 | N/A | US$ | 966 | ||||||||||||||||||||||
Gnma II Pool 081153 | | Short-term investment | | US$ | 3,692 | N/A | US$ | 3,637 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 6,978 | N/A | US$ | 6,891 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 3,388 | N/A | US$ | 3,387 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. Mtn | | Short-term investment | | US$ | 4,930 | N/A | US$ | 4,877 | ||||||||||||||||||||||
Federal Home Loan Mtg Assn | | Short-term investment | | US$ | 4,847 | N/A | US$ | 4,836 | ||||||||||||||||||||||
Federal Home Loan Mtg Corp. | | Short-term investment | | US$ | 4,903 | N/A | US$ | 4,886 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 6,925 | N/A | US$ | 6,913 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 4,953 | N/A | US$ | 4,928 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 9,997 | N/A | US$ | 9,831 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 2,532 | N/A | US$ | 2,470 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 1,042 | N/A | US$ | 1,013 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 7,887 | N/A | US$ | 7,810 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 3,379 | N/A | US$ | 3,347 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 9,134 | N/A | US$ | 9,133 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 4,927 | N/A | US$ | 4,888 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 7,961 | N/A | US$ | 7,912 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 7,014 | N/A | US$ | 6,830 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 4,936 | N/A | US$ | 4,900 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 2,454 | N/A | US$ | 2,462 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 7,018 | N/A | US$ | 6,905 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 4,997 | N/A | US$ | 4,942 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 7,042 | N/A | US$ | 6,938 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 6,098 | N/A | US$ | 5,949 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 3,976 | N/A | US$ | 3,946 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 13,953 | N/A | US$ | 13,836 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 4,939 | N/A | US$ | 4,880 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 13,983 | N/A | US$ | 13,854 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 13,981 | N/A | US$ | 13,855 | ||||||||||||||||||||||
Federal Home Ln Bks | | Short-term investment | | US$ | 4,136 | N/A | US$ | 4,101 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 999 | N/A | US$ | 992 | ||||||||||||||||||||||
Federal Home Ln Mtg Corp. | | Short-term investment | | US$ | 4,933 | N/A | US$ | 4,925 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 5,270 | N/A | US$ | 5,210 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 4,430 | N/A | US$ | 4,351 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 4,921 | N/A | US$ | 4,885 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 6,940 | N/A | US$ | 6,914 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 6,903 | N/A | US$ | 6,894 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 4,981 | N/A | US$ | 4,927 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 6,997 | N/A | US$ | 6,942 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 7,892 | N/A | US$ | 7,877 | ||||||||||||||||||||||
Federal Natl Mtg Assn | | Short-term investment | | US$ | 14,952 | N/A | US$ | 14,888 | ||||||||||||||||||||||
Federal Natl Mtg Assn Mtn | | Short-term investment | | US$ | 15,787 | N/A | US$ | 15,689 |
(Continued)
-41-
March 31, 2005 | ||||||||||||||||||||||||||||||
Market Value or | ||||||||||||||||||||||||||||||
Carrying Value | Net Asset Value | |||||||||||||||||||||||||||||
Relationship with | Financial Statement | Shares/Units | (US$ in | Percentage of | (US$ in | |||||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | the Company | Account | (In Thousand) | Thousand) | Ownership | Thousand) | Note | ||||||||||||||||||||||
Federal Natl Mtg Assn Mtn | | Short-term investment | | US$ | 9,758 | N/A | US$ | 9,709 | ||||||||||||||||||||||
Fed Hm Ln Pc | | Short-term investment | | US$ | 3,466 | N/A | US$ | 3,454 | ||||||||||||||||||||||
Federal Natl Mtg Assn Mtn | | Short-term investment | | US$ | 7,000 | N/A | US$ | 6,909 | ||||||||||||||||||||||
Corporate issued asset-backed securities | ||||||||||||||||||||||||||||||
Americredit Automobile Rec Tr | | Short-term investment | | US$ | 1,055 | N/A | US$ | 1,041 | ||||||||||||||||||||||
Americredit Automobile Receiv | | Short-term investment | | US$ | 1,221 | N/A | US$ | 1,218 | ||||||||||||||||||||||
Americredit Automobile Receivb | | Short-term investment | | US$ | 4,949 | N/A | US$ | 4,873 | ||||||||||||||||||||||
Americredit Automobile Rec Tr | | Short-term investment | | US$ | 2,000 | N/A | US$ | 1,980 | ||||||||||||||||||||||
Bmw Veh Owner Tr | | Short-term investment | | US$ | 4,978 | N/A | US$ | 4,934 | ||||||||||||||||||||||
Capital Auto Receivables Asset | | Short-term investment | | US$ | 3,273 | N/A | US$ | 3,238 | ||||||||||||||||||||||
Capital One Auto Fin Tr | | Short-term investment | | US$ | 781 | N/A | US$ | 778 | ||||||||||||||||||||||
Capital One Auto Fin Tr | | Short-term investment | | US$ | 3,000 | N/A | US$ | 2,975 | ||||||||||||||||||||||
Daimlerchrysler Auto Tr | | Short-term investment | | US$ | 4,991 | N/A | US$ | 4,941 | ||||||||||||||||||||||
Daimlerchrysler Auto Tr | | Short-term investment | | US$ | 2,989 | N/A | US$ | 2,977 | ||||||||||||||||||||||
Daimlerchrysler Auto Tr | | Short-term investment | | US$ | 4,897 | N/A | US$ | 4,845 | ||||||||||||||||||||||
Fifth Third Auto Tr | | Short-term investment | | US$ | 3,000 | N/A | US$ | 2,980 | ||||||||||||||||||||||
Ford Cr Auto Owner Tr | | Short-term investment | | US$ | 10,999 | N/A | US$ | 10,875 | ||||||||||||||||||||||
Gs Auto Ln Tr | | Short-term investment | | US$ | 2,948 | N/A | US$ | 2,962 | ||||||||||||||||||||||
Household Automotive Tr | | Short-term investment | | US$ | 238 | N/A | US$ | 238 | ||||||||||||||||||||||
Hyundai Auto Receivables Tr | | Short-term investment | | US$ | 3,500 | N/A | US$ | 3,411 | ||||||||||||||||||||||
Long Beach Accep Auto Receivab | | Short-term investment | | US$ | 2,526 | N/A | US$ | 2,489 | ||||||||||||||||||||||
National City Auto Receivables | | Short-term investment | | US$ | 1,206 | N/A | US$ | 1,204 | ||||||||||||||||||||||
Navistar Finl 2003 A Owner Tr | | Short-term investment | | US$ | 4,928 | N/A | US$ | 4,847 | ||||||||||||||||||||||
Nissan Auto Receivables | | Short-term investment | | US$ | 7,000 | N/A | US$ | 6,928 | ||||||||||||||||||||||
Onyx Accep Owner Tr | |